In our previous blog post, we discussed some options you have for dealing with your credit card debt. There is another option that you have if you are battling mounting credit card debts -- you can close your credit card accounts.
Why should I close credit card accounts?
There are a few reasons why you should close a credit card account. If your account was fraudulently charged, closing your account is a good idea. This can save you a lot of hassle later. Fraudulent charges don't always mean your card number was stolen. Instead, recurring charges for a monthly service plan that was canceled can be considered fraudulent. Also, if you are drawn into spending money just because you have an available balance or if the credit card account has high fees or a high interest rate, closing the credit account is likely a good idea.
Will that affect my credit score?
Closing a credit card account affects the amount of available credit that shows on your credit report. That can bring down your credit score some; however, you should be more worried about overcharging on your credit cards because that could make your credit score plummet faster if you can't pay the bill.
Anyone who is starting to get overwhelmed by credit card debt should work to get that debt under control before it turns into a dangerous downward spiral. Seeking help for overwhelming credit card debt might be necessary. In that case, exploring options like bankruptcy might help you to make an informed decision about how to handle your debt.
Source: Money & Career Cheat Sheet, "3 Reasons Why You Should Close a Credit Card," Sheiresa Ngo, accessed July 14, 2015