Closing a credit account is not always the best solution to solve financial problems. This is because it may affect your credit score in a negative way. So instead of closing your credit account, it is best you keep it open.
Keeping your credit account open is good because as long as you continue to make all your payments on time.
And you do not overextend payment; frequently using your credit account will have a positive impact on your credit scores.
Keeping your credit accounts open for a long period of time is a good strategy, as it will help you to build and maintain good credit.
If you are also planning on taking a loan in the future, it is best you keep it open.
Why you Should keep your Credit Account Open
Before closing your credit account, it is best you have a view of your credit report and examine how closing your credit account will affect your score negatively.
When you do this, it 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, and it has the tendency of harming your credit utilization ratio.
- It will be beneficial to you because it keeps your history of payment and the age of the oldest credit card account positive.
- If you are if a young age and you have a short credit history, it is best you 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 very 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 in order 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 have to frequently use your credit card.
You have to occasionally make a purchase on the card. It could be every three to four months. Then pay off your balance at the due time so as to keep it active and open.
2. Watch out for Closure Notice
Some credit card issuers notify their credit cardholders about card closure, while others just 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 closed, you should call the credit card issuer to keep it open.
3. Putting a Small Recurring Charge on your Account
Putting a small recurring charge on your card will help you keep your account open. If you think you will not be able to use your credit card frequently in order to keep it open.
You should automate it by using your card to pay for a recurrence charge. 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 happen to be a regular online shopper, then you should set up your card as a primary card for your online shopping account.
If you follow these laud down steps, you will be able to keep your credit account open.