Q: I have totally had it with my card. They treat me like crap and have tripled my APR and started charging an annual fee. Should I close my credit card account? Because I don’t see any reason to keep it open.
A: Everyone knows credit card companies can sometimes get out of line, but ever since the “great recession” it seems they are being more aggressive than ever before… higher APRs, new annual fees, poorer customer service, and the list goes on. But should I close my credit card or should I keep it open when these things happen? Well, here are some points to consider…
- Impact on your credit score? There’s a lot of misinformation (often exaggerated) of what impact closing a credit card will have on your credit score. For a detailed explanation, here’s a recent post which addresses the question how does closing a credit card affect your credit score?
- Charged an annual fee? Is the card account you want to close charging an annual fee? If so, then it probably is worth closing (but visit the above link for a more informed decision). Think about it – if the account is costing you $60 per year and it’s a completely unwanted card, that will cost you $600 over the course of a decade. So if you don’t want it and aren’t going to use it, it often times makes sense to close it.
- Interest rate shot up? To be honest, just about everyone (even those with perfect credit) have seen their APRs raised to at least some degree. Was yours raised a reasonable amount (such as a few percent) or did they double or triple it? If it’s an extreme rate increase, it might be time to move elsewhere if you have good credit and get approved for a better card.
- Crappier customer service? We all know customer service overall – regardless of the industry – has deteriorated dramatically as calls are outsourced overseas. Has your credit card account’s service gotten to the point where it’s unbearable? If so then you may want to check out the Discover More or Chase Sapphire (both of which have excellent American call centers).
- Too low of credit limit? Did they slash your limit without reason? Again, this is something everyone has experienced, but some have been hit harder than others. If the cut is unreasonable, then start looking elsewhere… especially if the new limit they gave you doesn’t even allow you to keep monthly charges below 25% of your credit line (which is better for your score).
- What’s your credit like? Last but not least, unfortunately we sometimes have to take what we can get. If your credit isn’t so good, you may have to settle for what you have (for now). But even if your credit needs some help, there’s almost always at least some slightly better options out there for you. However if you are in the process of rebuilding your credit, it may be better to keep the account open even if you despise it (just don’t carry a balance on it).
So going back to the question of should you close your credit card account or not… well ultimately, the decision is up to you. After weighing the above points, how do you feel? If you’re on the fence about it, perhaps you should take a few days to think it over.
If you would like to shop for a new credit card, we have a ton of detailed credit card reviews – take a look at your options to see if you can do better!