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Most often than not, when consumers find themselves facing huge debts on their credit cards without a means to repay them, they feel closing the credit card is the only option. However, this is not the truth. It is important to understand that closing the credit cards does not imply your debts will be completely eliminated. Instead, closing a few credit cards can have a negative impact on your credit history. Let us take a look at a few credit cards that should not be closed.
The first step most individuals take when they have high debt on their credit card is to close it. This is definitely not a good idea. Here is the truth you need to know. When you close a credit card just because of a high balance, even if you have available credit limit, it will be reduced to $0. So, when it reaches the credit bureaus, they will assume you are closing the credit card because you have utilized the entire amount on it. This can tarnish your credit report. 30% of your credit score comprises of the debts you have incurred on your credit cards and cards with $0 balance and pull it down significantly.
If you have a credit card that you obtained years ago, never think of closing it. The terms and conditions governing credit cards issued a few years ago are more favorable compared to the ones being issued now. Closing such credit cards can be a foolish decision because, try as hard as you may, you cannot get such good deals on any of the current credit cards.
If you have just one credit card in your wallet and want to close it because of high debts, it is a totally unwise decision. Under the circumstances you are currently in, closing the credit card would imply you would be left without credit cards for a long time. Credit card lenders have tightened their belts and the eligibility criteria for availing the credit cards are extremely stringent. Closing your only credit card would mean you would not have any in case of emergencies.
Rather than closing credit cards, consider opting for various debt consolidation options that are offering special deals for customers in dire need. This will not only help ease your financial mess, it will also prevent you from pulling down your credit score further.