The short answer is, never. The longer, and better, answer is that in general it’s not a
good idea to close credit cards except for under a few circumstances. Closing credit
cards can cause your credit scores to go down because you lose the value of the
unused credit limits, which are important to your scores. The circumstances where
closing cards is okay are divorce and irresponsibility. If you are…
…going through a divorce closing your cards is almost a requirement. When you go
through a divorce the court is going to assign payment responsibility for your debts. If
you have joint credit card debts then the lender is going to hold you both liable for the
payments, regardless of what the court says. This means if your ex-spouse is supposed
to pay the joint credit cards but he doesn’t, then the late payments are going to show
up on your credit reports as well as his. Closing the card eliminates the ability for new
charges on the card, which helps to reduce the risk of negative credit reporting. And, it
also eliminates the possibility of your ex-spouse charging up the card out of spite, which
is so called “malicious spending.”
…irresponsible then it’s definitely a requirement that you close your cards. Credit isn’t
for everyone. Read that again, credit isn’t for everyone. If you think that you’re in
credit card debt because the credit card companies gave you a card then you’re not
ready for credit cards. If you use your cards as income then you’re not ready for credit
cards. Using credit cards improperly usually leads to lower credit scores because you’re
making late payments and often defaulting. This makes continued use of cards more
expensive because you’re paying to subsidize you’re ongoing risk. In fact, if you’re not
careful your credit card debt will become the most expensive debt you’re carrying.
So, close ‘em if you got ‘em.
Michael B. Citron is an internationally known public speaker and author. He lectures for professional associations worldwide. Michael is a serial entrepreneur who is dedicated to living the American dream, and helping others to do the same. His role at DisputeSuite.com has placed him in the spotlight of the credit repair industry. DisputeSuite is the largest provider of technology and education services to the industry, and has been a catalyst in the forward movement to standardize the credit repair industry.
