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ARTICLES about Credit Cards | >> Articles List

Closing Credit Cards – Applying for Better Credit Card Offers

12:00:00 AM Tuesday, August 21, 2007 Closing Credit Cards – Applying for Better Credit Card Offers

Almost every credit cardholder comes to the point when he or she needs to close existing credit cards. There might be different reasons to do that.

Some people need to close their credit card accounts because they want to apply for a better credit card offer but understand that having too many credit cards will hurt their credit score. Some feel like having many cards makes them spend more and close their cards in order to prevent overspending. And some just want to carry less plastic in their wallets.

It is a well-known fact that closing a credit card might affect your credit history. On the other hand, having too many credit cards is not good for your credit report either. That means you can not apply for new favorable credit card offers. A credit card user feels trapped.

However, closing a credit card account is not necessary a bad move. There are some not widely known strategies a credit card owner should use when closing a credit card.

Most credit card owners hesitate to close their credit card accounts because they have simply heard that it might hurt their credit history but they do not understand how exactly it might happen.

Those who consider closing a credit card account need to understand how it will affect their available credit and the average age of their credit history.

Available credit is the amount you can borrow on all you credit cards. You can calculate it easily buy subtracting the sum you already owe from your credit limit. So, if you close a credit card your credit limit decreases but the amount of you debt stays the same. The same thing happens when credit bureaus calculate your credit utilization - the ratio of the credit limit you have and the amount of balance. With each successful application for a new credit card offer your available credit and credit utilization increase your credit score.

Closing credit card accounts also affects the average age of your credit history. This is especially so if you close a credit card you have been using for years.

So, what are the approaches you can take if you need to close a credit card account?

- Avoid closing your oldest cards. If the reason for closing accounts is that you have too many credit cards to apply for a new enticing credit card offer just close the one you have most recently opened.

- Close credit cards with the smallest credit limit. This will not significantly affect your available credit.

- Combine credit limits. This strategy works especially well if you have several credit cards issued by the same bank. Of course, sometimes your credit card company might not allow you to combine, for example, a business credit card into a consumer card but most of the time you will be able to solve the problem by negotiating with the bank.

- Ask for a credit limit increase. You will have fewer cards but your credit utilization will stay the same.

If you follow these simple rules getting rid of the plastic you do not need will not lower you credit score. And with good credit rating you will be eligible to apply for the best credit card offers!

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COMMENTS
Ernest Lane 07:10 PM, August 27, 2007

I was told by Chase that becouse my account was close
that my annual percentage rate which is at 29.24% would
not go down just just because i made payments on time
how can i get help i went to other card companys could not get
them to take over the balance to transfer

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NEWS about Credit Cards | >> View all News

Best Credit Card Rewards 05:15:42 AM Thursday, November 06, 2008

Banks and card companies cut their lending risk factor by either lowering credit limits, increasing APRs on some credit cards or by not approving applications at all. The slumping economy and credit crisis force lenders to curtail 0% APR offers, benefits and even rewards programs. Some card offers have already imposed restrictions on when and how rewards can be redeemed.
The good news is that there are still plenty of deals offering lucrative cash back, gas and miles rewards and you only need to apply for the right card now. The difficulty here is the rewards vary from card to card and to make the best deal, you need to compare offers and choose one based on your spending priorities and financial standing. The key is to make the rewards work for you.


>> Full story... Comments (0)...
Credit Card Payment 04:56:31 AM Thursday, October 16, 2008

Most of regular unsecured credit card offers for valuable customers carry in-built benefits which are free from additional charge. The benefits include $0 fraud liability, extended warranty protection, 24-hour roadside assistance, auto rental insurance, free online account access and management services and others. Their cost is already distributed among the annual fees, if any; interest rates and other charges specified in the fine print and you do not mark it out making credit card payments.
But on receiving a statement, you might be confused to spot there a charge you did not authorize in fact. The charge, labelled as payment protector premium, is designed to cover you in the event you cannot pay bills for some reason.


>> Full story... Comments (1)...
Card Charges 06:14:29 AM Thursday, October 02, 2008

While a whole range of charges associated with credit card use is not a surprise any more, the way they are sometimes applied may confuse a not too knowledgeable consumer. What hurts most is the consequence which might come up to a damaged budget at best and ruined credit at worst. The fine print is a great source of information on all the charges and terms they are applied under, but one needs to be financially educated to understand a point there.
If you're looking for a proper card offer right now, or you're already holding a plastic, the following information will be of prime importance for you, especially as the recent changes in the market require new and more rational behavior.


>> Full story... Comments (1)...
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