One of the most feared rumours relates to cancelling old credit cards, with many people believing that they shouldn’t do it because it may damage their credit score.
Why cancelling could be a smart decision
Getting rid of old credit cards does not necessarily mean that you will damage your credit score. In fact, according to Money Saving Expert, cancelling cards can even improve your ratingby giving you access to less available credit. This shows lenders that you are not as likely to run up big balances and get yourself in debt on a number of different credit cards.
Another benefit of cancelling old credit cards is that it gives you the chance to reinvent yourself as a new credit card customer. This means that you may be able to gain access to new customer offers, which are often better than those offered to existing credit card users. After you cancel, lenders reportedly have a time limit after which they will attempt to win you back as a customer with great introductory deals.
How to cancel old credit cards properly
Cutting up a credit card will definitely stop you using it, but this doesn’t mean the account is cancelled. The only proper way to ensure your credit card is cancelled is to call up the issuer and tell them you want to cancel it. You may also want to request confirmation in writing that your card will be cancelled, just in case the issuer doesn’t act on your phone call. When you cancel, you might even find that the lender offers you a better rate or a more attractive deal to try and tempt you stay.
When to keep old cards
Whether to cancel old cards or not is far from a black and white issue, as there are a few good reasons to hang on to some of your credit cards. For example, you might want to keep cards for emergency funds, to gain access to existing consumer deals or to give yourself extra protection when making purchases. Keeping credit cards can also help you to improve or rebuild your credit rating. This makes it more likely that the next time you see a good credit card deal or apply for credit cards online, you will be accepted.
Elizabeth Lampman is a coffee-fuelled Mom of 2 girls and lives in Hamilton, Ontario. She enjoys travelling, developing easy recipes, crafting, taking on diy projects, travelling and saving money!