CREDIT CARD NEWS
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » Cardholders Warned Against Giving Up Cards

Cardholders Warned Against Giving Up Cards

October 14, 2009
Add to Favorites:

American credit cardholders are being cautioned by financial experts against getting rid of cards they consider problematic. Despite the volatile economic environment, cardholders are being told not to dispose credit cards even if they pose a potential threat to the financial health of the cardholders. Experts say that unused credit cards still have a significant role in credit ratings and scores and getting rid of them too soon can hurt credit scores.

According to analysts, many Americans are starting to panic because of the current economic environment. As a result, there has been a reported increase in the number of cardholders closing down card accounts. While the trend comes as no surprise to many credit experts, they warn that closing down too many credit cards can have a negative impact on credit ratings. When this happens, they explain, cardholders will have an even tougher time looking for new creditors and lenders.

Before getting rid of any cards, cardholders must remember to pay off all balances. The tree credit agencies, Equifax, Experian, and TransUnion, do not look too kindly on cardholders who close down accounts without settling debts. Future card issuers may also hesitate to provide credit to cardholders because these consumers are considered high risk. Card companies are often weary of these cardholders out of feat that they may not pay their dues in whole or in time.

Also, cardholders who choose to completely ignore their growing card debt problems can stand to suffer in the future because of lower credit ratings. If card companies decide to let collection agencies take care of due payments, then any collectibles above $100 would mean that a cardholder's credit history would be tainted. To avoid this, analysts suggest paying card issuers with whatever amount cardholders can afford. In these increasingly trying times, creditors are more than willing to accept any payment rather than miss out on any payments at all.

Experts also say that instead of giving up credit cards, cardholders can choose to make partial payments. They add that the important thing is for indebted clients to approach representatives of card companies and ask to negotiate. With the credit card industry suffering losing billions of dollars in uncollected payments and debts, card firms are opening their doors to select cardholders. The logic behind the shift in policy, many analysts say, is that card issuers would rather get any payment from cardholders rather than write debts off as losses.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.