Having a credit card has become a trend these days and almost everyone has one or more credit card. Multiple cardholders often get the thought of closing one of their cards due to several reasons. Some people overspend with multiple cards, others just find it difficult to manage all of them together, and some people just don’t need them. But, have you ever thought about whether you can close your credit card or not when you have an outstanding balance on it? So just read this post to find out more about can you close credit card with balance.
Sometimes you don’t even know about an outstanding balance on an unused credit card as it is just the annual fee that you forgot to pay and then the amount keeps increasing due to the interest charges. In such situations, you will definitely want to close your card as soon as possible. But, it is really possible? Read on to know more.
Is It Possible To Close Credit Card With Balance?
Yes, most of the card issuers allow you to close your credit card account even with an outstanding balance on it. But, it doesn’t mean that you will not have to pay that outstanding balance. You will have to pay the outstanding balance even after your card is closed. Closing a credit card with dues will only help you avoid any new charges or increased charges.
For example, if the annual fee or monthly membership fee is increased after you close your card, you will pay the old charges only and not the increased one. So, it is your wrong assumption if you think that you can avoid all the charges by getting your credit account closed without paying its bill.
However, it is always better to first clear your due and then close your account if you really want to. But, it is totally up to you. If you think that you should close it so that you don’t overspend, you can go for it. Otherwise, you should prefer to pay the outstanding balance as soon as possible so that you can get your account closed without any worries in your mind.
Advantages of Closing An Unused Credit Card
- Closing an unused credit card is beneficial when the card comes with an annual fee. If you don’t use a credit card at all and you don’t have any purpose for keeping it with you, it will be good for you to close it as you can avoid the annual fee that you were paying unnecessarily.
- Some people tend to overspend when they have multiple credit cards. If you are also one of such people, you should prefer closing one of your least useful credit cards so that you don’t spend unnecessarily on it.
- If you find it very difficult to manage multiple credit accounts together, you should better close the unused credit card. it will help you manage your remaining credit cards well.
When It Is Right To Keep An Unused Credit Card?
It can be beneficial in many ways to close an unused credit card, but the same can be disadvantageous as well. There is no harm in keeping an unused credit card with you if it comes with a zero/very low annual fee. It is because having multiple credit cards can help you maintain a low credit utilization ratio, which is one of the major factors affecting your Credit score. So, if you are thinking of closing a credit card without paying an outstanding balance, think thoroughly about whether it will be really beneficial for you or not. Moreover, the average age of your accounts also matters while determining your credit score. So, if you are thinking of closing your oldest credit account, it might be a really bad idea and you may regret it in the future. So, think carefully and close a credit card only if it’s necessary or if you can’t manage multiple cards.
Now, you might have understood that banks/credit card issuers provide you with an option to get your credit account closed without paying the outstanding balance and you can pay it after that. But, you must think carefully before going with this option. However, there is no harm in availing of the facility but you should try to pay the outstanding balance first.
It is because closing an account without paying your dues may reflect in your credit report for up to ten years and hence will affect your credit score in a negative way. Moreover, you need to think about whether it is really the right decision to close your credit card or not. As long as you are a responsible user and can manage multiple cards, you should keep an unused card as well if it doesn’t charge a high annual fee. So, keep your requirements and credit score in mind, and make a decision wisely.