Is it Useful to Close a Credit Card After Paying it off
July 14, 2022

Paying off the credit card debt is often a hard-to-beat target. You need to work sincerely and stay focused. It will help you be financially disciplined and disburse the balance on time. 

You can cancel the credit card at this point if you wish. On the different side, you can think of keeping it also. But there are pros and cons to preserving and nullifying the credit card.

You should review the consequences you might face in both scenarios to decide what is best for you. The absolute determination should be founded on your preferable preference. Don’t cancel your card because your friend has done the same!

It requires careful analysis, like how you do while getting a loan to improve the home. Fulfilment of this step will pave the way for the best decision.

Closing the card with no balance will have a negative imprint on your overall credit record. Nevertheless, your current situation may demand the closure of the card. So, be wary of what you will do with your credit card. 

Clearing off the card debt is a huge achievement. However, closing the card can ruin all the goodwill of the achievement. So, don’t take such sensitive decisions too fast.

Explore things to make sure it is a good idea to close the card at this point. This blog can help you attain determination.

Reasons to motivate you to close the card

You might have your own reasons to support cancelling the card. Check if it matches any one of the reasons mentioned below:

Reduce the number of credit cards

If you feel the need to reduce the number of credit cards, you can cancel the freshly paid-off card. You don’t want the hassle of keep checking multiple cards, and downsizing the number will help you save time.

Want to focus on other better cards

This card which you have recently paid off has limited benefits to offer you. Thus, you want to focus on other cards with better offers. 

Besides, the existing card gives out a low credit limit but charges you with high interest. You have found a better replacement for it, and this new card has different rewards to please you.

Want to get rid of credit card debt

Maybe, this is your first-hand experience with a credit card. But you are not so happy with how everything came out. You fronted a lot of crises due to debts on the card.

So, you don’t desire to fetch into trouble likewise. For this explanation, you may choose to cancel the card.

Perks of cancelling the credit card

The credit card works like a loan. So, you have to pay the interest, which is a burden. So, the positive things that can happen when you cancel a credit card are:

Handling finances become easy

When the number of credit cards gets reduced, monitoring the transaction becomes effortless. You will have fewer credit cards. So, you will have less number of transactions to track.  

Lessen the exposure to online scams

Managing too many cards at the same time is tiring and scary also. Your financial transactions are vulnerable to online scams. With a reduced number of credit cards, the risk is also reduced. In short, you will have to worry less.

Ask for a better bid

When the balance is paid off on time, you reach an advantageous position where you can ask the credit card provider for some better offers. They might be ready to provide you with low APR and additional rewards.

Utilise other attractive credit card offers

Closure of the existing card gives you an opportunity to get another card with different facilities. You can even look for alluring introductory offers, and they often come with relaxation in interest rates for some duration and other rewards. 

But before you take this step, review the terms and conditions related to the cancellation of your credit card with your previous card provider. Some of them often restrict their users from opening another credit card within 24 months of cancelling the existing card. 

Setbacks of cancelling a credit card

Don’t be excited to know the advantages of cancelling the credit card, and it has some implications also. You can find it out here:

Hamper the credit scores

Your credit utilisation ratio gets increased after closing your zero-balanced credit card. As a result of it, your credit scores will suffer. It will lower your scores.

Lose a useful source for emergency

It does not matter how rarely you use your credit card. Having one is very crucial, and it can save you in numerous circumstances

It lets you fetch money in the event of an emergency when other borrowing options might not be available. So, when you close this harmless card, you lose a reliable friend who can support you during any crisis. 

Closing the wrong card

You may simply cancel the card without cross-checking the terms and conditions and the rewards system. In this case, you may miss out on an opportunity to have a credit card that can attract the best offers for you. 

Ways to close the card

You will have to contact the credit card provider company if you want to cancel the card. Besides, you will have to submit a written request via mail. 

You will have to clear off the remaining dues without failing once the process gets started. It is because additional interest will be levied on the outstanding balance. 

The bottom line

Whether or not to close the credit card is a critical decision. You might feel like cancelling the card once you pay off the remaining balance without any hitches. 

You have to take certain aspects in mind before making this vital decision. You should validate how this decision of yours can affect your future and financial well-being.

Cancelling just needs you to complete a few steps. However, you have to figure out how you should go about it. Understand how this decision would benefit you and how it can put a bad impression on you.

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