Debt Relief

Should You Retire Your Credit Cards Completely?

All you have to do is read any financial advise blog or look at how much you spend on minimum payments each month and you know that credit card debt is usually bad. The traditional answer to that is to retire the cards and swear off ever using them again. While that amount of restraint is commendable, it may not be completely wise.

Letting your card sit for too long may cause the issuer to declare the account inactive and close it. That is going to immediately impact your credit score via the length of your credit history and credit utilization ratio. If the card is the oldest in your wallet, it will appear that you have only been using credit since the issuance of your next oldest card. Then, by losing a line of credit, it appears that you are carrying a higher ratio of debt compared to your available credit. Both can lower your credit score by close to 100 points early on.

What are you supposed to do then? Buy a tank of gas every other month. Buy the gas, wait a few days, then pay off the balance. The card is being used so the issuer will not close it and you are not having to pay interest on the debt.

For more, check out this article on debt consolidation in Plano, TX.