Best Time to Close your Credit Card with Zero Balance

I believe you want to know the “Best Time to Close your Credit Card with Zero Balance”? Well, this isn’t a problem for you if you are already here. If you want to know all about this, then you are fully covered as I have addressed it right here in this article.

Best Time to Close your Credit Card with Zero Balance

So what you will do right now is simply read on to get to know more about this topic, because it is really helpful and even has some additional information to share with you. So read further and get the information.

Best Time to Close your Credit Card with Zero Balance

There are lots of reasons for you to consider closing a credit card, and they are not even limited to just finding a better one. You can simply find yourself in a situation where you are no longer getting the value from a high-annual fee card.

You might even be tempted to close a credit card that has a balance as a means to stop you from using it, and that’s perfectly reasonable.

While you can simply or typically close a credit card that still has a balance, keeps in mind that you are still responsible for making your monthly payments until your entire debt is paid off. This then includes interest charges that accrue as well as any fees you rack up.

What Is the Effect on Your Credit Score?

Regardless, closing a credit card is not the end of the world. You just simply have to keep the consequences in mind. For example, no matter why you simply have a reason or choose to close a credit card account, you might then notice an impact on your credit score.

Closing an account also reduces the amount of available credit you have, thus increasing your credit utilization. Because the amounts you owe in relation to your credit limits account for 30% of your FICO score, it should come as no surprise that closing an account can cause your score to fall.

Also, closing a credit card will simply reduce the average length of your credit history, which accounts for another 15% of your FICO score. Causing the average length of your credit history to simply decrease can also damage your credit score, which is never a good thing.

An Alternative to Closing a Card with a Balance – Paying Off Your Debt

If you are worried about the negative impacts that simply come with closing a credit card with a balance, you might even want to consider an alternative — keeping your account open and also focusing on repaying your debt instead.

You might even feel as if you should close your account in order to simply reduce the temptation to keep spending, but there are simply other ways to make sure that you are not racking up more debt.

You can simply put your credit card away for safekeeping, for example, whether that means stashing it in a home safe or freezing it in a block of ice.

Paying off your debt can also have a positive impact on your life and also on your credit score. In any case, paying off debt decreases your utilization. The second most important factor is that it makes up your score.

Since your payment history simply makes up 35 percent of your FICO score, your on-time or early credit card payments can also then even help you build better credit over time.

Consider transferring your balance

While you are simply paying off your debt with the card you have, there is always a possibility that you can also move your debt to another credit card with a balance transfer. This can even help you save money on interest every month, and you may even be able to get a zero percent APR for a limited time.

For example, the Discover it® Balance Transfer simply offers a zero percent intro APR for 18 months on balance transfers from other cards, followed by a variable APR ranging from 13.49 to 24.49 percent.

The first balance transfer incurs a 3% fee (which rises to 5% for subsequent transfers, see terms), but the interest savings can easily amount to hundreds or thousands of dollars.

How might this work? Assume you have a credit card balance of $4,000 with a 19% APR and you normally pay $200 per month. Using Bankrate’s credit card payoff calculator, it would then take you another 25 months to pay off your debt and also fork over $848 in interest charges in the process.

If you transferred those balances to the Discover it® Balance Transfer, you would be charged a $120 balance transfer fee but would pay no interest for the first 18 months (13.49-24.49 percent variable APR thereafter).

If you were then able to boost your monthly payment up to an amount of $228.89 each month, you could then simply pay off your entire balance plus the balance transfer fee within 18 months, saving over $800 and also cutting 7 months off your repayment timeline.

Also, keep in mind that there are a plethora of different zero percent APR cards to choose from, each with its own set of terms. For example, if you simply want the longest zero percent APR offer available, consider the Citi Simplicity® Card.

This card also offers a 0% APR on balance transfers for a full 21 months, followed by a variable APR ranging from 14.74 to 24.74 percent. There is a 5% balance transfer fee (minimum $5), but the savings can make the fee worthwhile.

If you do choose to transfer a balance to a zero percent APR credit card, you should also make sure your entire balance has been transferred over before you simply stop making payments on your old card. You might also be able to verify this online via an account management page, but you can even call the card issuer and ask them to check.

When Should I Close A Credit Card With A Zero Balance?

What happens when you pay off your credit card balances, whether with the original card or a new zero percent APR card you’ve signed up for? At that point, you can now close your credit card with a zero balance, or you can keep it open. It’s really up to you.

Experts then simply suggest that keeping old accounts open can make a lot of sense — even if you do not use them. That’s because, as we have already suggested, keeping old accounts open increases your amount of available credit as well as the average length of your credit history.

You can then decide to close credit cards with a zero balance, but you certainly do not have to. If you are then worried that you will be tempted to use an old card to simply rack up a new balance, stash it away in your sock drawer.


Is It Better To Close A Credit Card With A Zero Balance?

Closing a credit card with a zero balance might even increase your credit utilization ratio and also potentially drop your credit score. In certain scenarios, it might even make sense to keep an open credit card with no balance. Other times, it might even be better to close the credit card for your financial well-being.

Is It Better To Close An Unused Credit Card Or Leave It Open?

In general, it is best for you to keep unused credit cards open so that you can benefit from longer average credit history and also a larger amount of available credit.

Credit scoring models reward you for having long-standing credit accounts and also for using only a small portion of your credit limit.

Does It Hurt Credit to Close Credit Card?

A credit card can then be canceled without harming your credit score⁠; just remember that paying down credit card balances first (not just the one you’re canceling) is the key. Closing a charge card will not affect your credit history (history is a factor in your overall credit score).

How Many Credit Cards Are Too Many? Best Time to Close your Credit Card with Zero Balance

Owning more than two or even three credit cards can simply then become unmanageable for many people. However, your credit needs and also your financial situation is unique, so there’s no hard and fast rule about how many credit cards are too many. The important thing is for you to make sure that you use your credit cards responsibly.


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