You’ve worked hard, made regular payments, and you’ve finally got that lingering credit card balance to zero. Now the account is sitting inactive. Should you close it?
There isn’t a clear-cut answer to that question as it depends on situation. The only black-and-white rules are these: keep your oldest credit card open and close any other accounts that have an annual fee.
Outside of that, there are a number of things to consider. Having too many credit cards can leave you open to identity theft, which is obviously a very bad thing. Some people talk about credit-to-debt ratio, and how having empty cards can help increase this to boost credit scores. Unfortunately, the public isn’t privy to the top-secret FICO formula, but the scuttlebutt chats about how this might not necessarily be the case. Large credit-to-debt ratios aren’t necessarily a bad thing, but they may not help your credit score as much as the types of purchases you make and the type of debt you carry.
Now, let’s think practically. You’ll obviously want an extra credit card for emergencies, but you won’t need five or six for emergencies. And if you’re the type of person that gives into temptation from time to time, those extra credit cards might get you in trouble.
The easiest way to look at is to first abide by the black-and-white rules above, then keep at least one for emergencies. After that, use some common sense and look at your situation before you decide what to do.
The views published here are the opinions of the writer and are not a substitute for legal counsel.
Israel Gonzalez
Real Estate Broker-Hollister CA
831-636-8858
Click here to contact me by email
