Deciding When to Cancel Your Credit Card

If you have a credit card that you haven’t used in awhile or have found a credit card that provides you with better service, more rewards, or a lower interest rate, it might be time to start canceling a few of your accounts. But, how can you decide if it is best to keep that card or get rid of it?

If you are about to make a huge purchase, such as a new car or a house, it is best to put off canceling your credit card until later. This is because keeping your credit card account open and active is good for your credit rating. So, if you plan to make a large purchase for which you will need to acquire a loan, it is best to keep your credit card account open. This way, it will improve your chances of getting the loan and of getting a good interest rate. After you have been officially approved for your loan and the interest rate has been established, go ahead and cancel that card if you don’t need it or want it any longer.

If you don’t have a big purchase coming up, it is usually best to get rid of the card rather than to collect many different cards. So, go ahead and cancel it and make your wallet lighter!