Broker Check

Cutting the (Credit) Cards

| November 15, 2017
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Nowadays, it is not uncommon or difficult for credit card use to get out of hand. In fact, our society promotes credit card use through incentive programs, loyalty programs, promotions, and advertising. Consequently, consumers may find themselves struggling to make even their minimum monthly payments. Regardless, new credit card offers arrive in the mail constantly, along with those checks inviting consumers to go ahead and “take that vacation” or “make those home improvements.” At first, it may seem tantalizing. But buying regularly on credit can quickly become a vicious cycle.

If credit card debt threatens to hinder your ability to reach your financial goals, you may want to create a plan to pay down your debt and limit your future use of credit cards. Once you have paid off your debt, consider closing any accounts that you no longer wish to use. In addition to removing the temptation to spend beyond your means, closing inactive accounts can also lower your risk of identity theft. In some cases, it may also increase your credit score. Many open accounts on a credit report may be a red flag to a potential lender, indicating that you could easily get into financial difficulties due to the large amount of readily available credit. 

Remember, cutting up the card itself or just not using it does not mean the account is closed. To properly close an account, you must call or write to the company with your request.

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