Ever possess a pile of Debit and Credit Cards rarely utilize? Ceasing to use a bank card may seem easy, but it definitely leave an impact on your wallet. Let's discuss five significant reasons you might want to cancel one of your cards.
1. Reducing Credit Utilization
5. Focusing on Financial Goals
1. Reducing Credit Utilization
Closing a card can actually lower your Debt-to-Credit Ratio, which is a big deal when it comes to your score. Overusing of your card can actually hurt your score, so closing a card you never use may be the best choice.
2. Simplifying Finances
Trying to control a collection of credit cards can be real headache. When you cancel a credit card, your financial situation can get easier to control, and it helps you keep an eye on your spending habits and reducing debt.
3. Avoiding Annual Fees
A lot of cards have yearly charges that really add up. If you have a card with a fee you don't need, closing the account can be a cost-saver.
4. Preventing Identity Theft
Having fewer credit cards means less of a chance of them being stolen and used without your knowing. Less cards mean it's quicker to determine what is lost if you lose one.
5. Focusing on Financial Goals
If you get rid of a credit card, it's easier to remain focused on your financial objectives, whether you're working to repay debts or setting money aside for a significant item.
Within my field of work as a financial advisor, I have observed many people experience some benefit by cancelling their cards. Consider Sarah as an example. She possessed three credit cards with high credit limits, but she rarely used them.
Well, after she cancelled one card, her credit rating significantly increased and she truly felt that she had her finances in order. Or consider John, who owned a credit card that he never used with an annual charge of $95. After he cancelled it, he retained that $95 each year and also made his life easier.