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Research: Clean Out Your Wallet By Closing Idle Credit Card Accounts -

Getting rid of credit card accounts that have lain dormant for a while can be a wise thing. Not only will it help you keep better track of your personal finances, but it can also save you money by helping you avoid having to pay needless fees. Eliminating excess credit card accounts can also go a long way towards helping prevent you becoming a victim of identity theft. Here’s how to go about getting rid of unwanted credit card accounts:

Terminate idle, underused accounts.

Target the credit cards you have that are potentially the most expensive, either because they have high APR’s or charge an annual fee.

Keep more than one account active.

Even though you want to cut loose a few credit cards, it’s best to keep more than one line of credit open because it’s better for your credit score. The higher your debt-to-credit ratio, the higher your score. Also, don’t underestimate the importance of having a card or two available just in case of an emergency.

Hang onto your oldest account.

It’s good to have a long credit history so you want to keep your oldest account active, even if it is not your favorite card to use. If your longest-standing credit card has a higher APR than you other cards you can always call up the issuer and try to negotiate a lower interest rate. Otherwise, just put it aside in a safe place and don’t use it.

Pick one card to use regularly and responsibly.

Creditors and credit scoring companies determine a person’s “creditworthiness” based upon their ability to use credit responsibly, so pick one card to use on a regular basis and be sure to pay the balance off, in full, at the end of each month. If you choose a card that has a rewards program like airline miles or cash back points you will enjoy the benefit of accumulating perks each time you swipe.

Cut up canceled cards.

Thoroughly destroy any and all old cards that are attached to closed accounts by cutting right through the card number and signature. This is to prevent thieves from stealing your card information and possibly reopening the account. But remember, just because you made the physical card disappear, it does not mean that the account, once closed, disappears from your credit report. Records of all your closed accounts and corresponding payment history will stay on your credit report for 7 + years. Check out your credit report once a year at minimum to ensure that there are no mistakes. Be sure to look for suspicious or fraudulent activity.