Closing a credit account is not always the best solution to financial problems. This is because it may negatively affect your credit score. So, you should keep your credit card account open instead of closing it.
Keeping your credit card account open is good as long as you make all your payments on time.
And you do not overextend payment; frequently using your credit account will positively impact your credit scores.
Keeping your credit card accounts open for a long time is a good strategy, as it will help you build and maintain good credit score history.
If you are also planning on taking a loan, it is best to keep it open.
Why you Should keep your Credit Card Account Open
Before closing your credit account, viewing your credit report and examining how approaching your credit account will affect your score negatively is best.
Doing this will help you understand why you need to keep your credit account open. Here are some reasons why you need to keep it open.
- Keeping your credit account open will help improve your credit score. When you close your credit account, you decrease your available credit, which tends to harm your credit utilization ratio.
- It will benefit you because it keeps your payment history and the age of the oldest credit card account positive.
- If you are young and have a short credit history, it is best to keep your credit card open because closing it will affect your total credit score.
- Closing your credit account will make you lose some credit card benefits. If you have been verging rewards with your credit account, closing it will likely make you lose such rewards. Also, you will lose other benefits attached to your card. So you have to keep it open.
- Not keeping your credit account open will affect your average age of accounts. If your credit card company should close a credit account that is much older than your other accounts, it will lower your average age of accounts.
How do you keep your Credit Card Account Open?
Here are some steps to take to keep your credit account open.
1. Account Closure After Several Months
Credit card issuers close credit accounts that have been unused for several months. So, to keep your credit account open, you must use your credit card frequently.
You have to purchase the card occasionally. It could be every three to four months. Then, pay off your balance at the due time to keep it active and open.
2. Watch out for the Closure Notice
Some credit card issuers notify credit cardholders about card closure, while others close the credit account without any notification.
So, when you get a notice from your card issuer that your credit account will be closed or has been completed, you should call the credit card issuer to keep it open.
3. Putting a Small Recurring Charge on your Account
A small recurring charge on your card will help you keep your account open. If you cannot use your credit card frequently, keep it open.
Automating it using your card to pay a recurring charge would be best. You can use it to pay for your phone bill, subscription account, or internet bill.
4. Make Card as Primary Card for Online Shopping
You can also make your card a primary card for your online shopping. This will enable you to keep it open. If you are a regular online shopper, you should set up your card as a primary card for your online shopping account.
If you follow these laid down steps, you will be able to keep your credit account open.
