A credit line is not readily acquired and should therefore be valued The first important reason not to close a credit card account is because your credit line is a valuable commodity which would be such a waste to trash just because you no longer want to use the card with which it came.
In order to realize the effect of closing a credit card account you have to be aware that when you were granted that plastic money token, a corresponding loan resource was given to you.
This is a privilege that is not always available for everyone and even when a person qualifies for acquiring a credit card, the credit line may not always be readily accessible.
That is the whole reason why after the approval of these cards, they may not always be ready for use immediately, pending the actual release of the credit line.
Your credit rating depends significantly on your debt to credit ratio Another reason why you should exert all effort to retain a credit line is the fact that your capacity for making loans is partly gauged by the ratio of your debts to your total available credit line.
Starting from a ratio of debt to credit line of 10 %, your credit rating goes down as the percentage increases.
By cancelling a credit card, you lose the loan resource that was associated with it and your credit rating goes down.
The ease with which you can get a new credit card depends on your credit rating We all know that there a many good reasons for striving to maintain a good, if not excellent, credit score.
For one, approval of new credit lines and credit cards may be delayed or made impossible by a bad credit rating.
You may well discover that after cancelling one of your credit cards, you cannot as easily acquire a new credit line and credit card.
So if your reason for cancelling your card is because you are hard put keeping up with high interest rates, what you should be thinking about is to transfer the balance of the unfriendly card to another card with a lower interest rate.
You can more easily get lower interest rates if your credit rating is good to excellent Having canceled or closed one or two of your credit cards, you may be surprised to find the interest rates of your remaining cards to have gone up in a few months.
Lenders are always monitoring the progress of your credit record and once they detect a worsening trend they are very likely to jack up interest rates in consideration of the fact that the card holder is becoming more and more of a liability to them.
Also, when you apply for a new card with your mediocre credit stature, you can only expect to get higher interest rates and lower credit limits.
You stand to lose more than you gain by closing any of your credit accounts.