Under what circumstances is it beneficial to close a credit card?
Credit Card: In today’s time, both the importance and need of credit card are increasing. Due to these excellent features, the demand for credit cards is also continuously increasing. With the help of credit card, you can make purchases even when you do not have money. Not only this, you also get benefits like cashback, reward points on doing credit card transactions. Many people have more than one card and sometimes when a card is not used much, people close it. Today we will know here how beneficial and how harmful it is to close credit cards that are not used much?
Disadvantages of closing credit card
If you close a credit card, it simply means that the utilization ratio of the other cards you have will increase. In such a situation, your credit score may be adversely affected. On the other hand, if you keep your credit card active, it will help in maintaining your utilization ratio and your credit score will remain in better condition.
Closing a card reduces the average age of your account and may lower your credit score. If there is no annual fee or renewal fee of any kind on your card, then closing the card can be harmful. Apart from this, this card can also help you in case of sudden increase in expenses.
Under what circumstances is it beneficial to close a credit card?
If you have to pay fees for your card and you are not using it much, then in such circumstances it may be a good decision to close the card. If you have many credit cards and it is difficult to manage all the cards, then you can close some cards as per your need. Keep in mind that before closing any card, avail all the reward points and cashback.
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