- Planning for year-end finances?
- Is it worth closing a credit card?
- Read this before closing a credit card
Year-End Planning: 2025 is the last month of the year, most people start their financial planning at the end of the year. Investing is calculated by reviewing their expenses, and many even decide which bank accounts or credit cards are no longer useful. So will closing an old credit card affect your credit score? Common people are asking this question. Read the news in detail to know about it..
Why close old credit cards?
People often decide to close an old card while looking for a new credit card with better rewards, cashback or offers. Sometimes, banks reduce card benefits or increase annual fees, making the card less profitable. Some people want to avoid having too many cards to control their spending. All of these reasons are valid, but it’s important to understand the impact on your credit score before making a decision.
Also read: IndiaFirst Life Insurance: ‘Jimmedariyan Usmse Bantiye, Halka Lagaga’ IndiaFirst Life’s new campaign to lighten the burden of responsibilities
Is it worth closing a credit card?
1. Impact on credit mix
If the credit mix is a home loan and a credit card, this is considered a good balance. However, if you close your only credit card, you will only be left with secured debts. This can weaken your credit mix and negatively impact your score.
2. Reduces the age of credit history
Old credit cards add to your credit history. The longer and cleaner the history, the better your score. If you close your old card, your average credit age decreases. That’s why sometimes you see a drop in your score immediately after closing the card.
Also read: Vi Prepaid Insurance: A First in Telecom Sector! Vi launches ‘Mobile Theft and Loss Insurance’ plan for prepaid customers
If the card is closed within the first 6 months, the credit history stops. This can make it difficult to get a loan or another card in the future. In most cases, the fallout from closing a credit card is minor and temporary. If you keep paying your bills on time, keep your spending on other cards under control, and keep your credit utilization below 30%, your score will improve again within a few months.
You can make small transactions on the credit card every few months to keep it active. If the card has an annual fee, talk to your bank and try to make it free for life. Additionally, if closing one card increases your usage, you can also consider increasing the credit limit on the other card.
Comments are closed.