If you are regular user of credit cards, you are likely to strive to good credit history. Every consumer wants to pay lower interest rates, receive lavish rewards, have no problem in getting a mortgage or auto loan. What is more, some employers practice credit score check before accepting another employee. Sometimes it seems like people with good credit have more opportunities than all other consumers.

It is common knowledge that building credit history requires a good deal of spending - one is supposed to have a number of credit card and loans in good standing, and some of them can sometimes become a burden due to high fees and interest rates. This is the main reason why people decide to close their credit cards, in spite of the fact that this can be pretty dangerous for their credit score. People do not close no fee credit cards or credit cards with rewards, they cancel products that provide no benefits to them.

If you feel that some of your credit cards are absolutely unnecessary or too expensive to keep, read our recommendations before closing them. Evaluate the risks and necessity and act accordingly.

Do not close your credit card in the following cases:

1. If the credit card is your only plastic now, you'd better keep it open. The reason for this is simple - your credit profile should contain information about the way you use different types of credit. So, if there is a home loan or some other loans in your report, but no data about credit cards, the bank will think you have no experience with plastics and you will be considered as high risk for them.

2. You have some unpaid balance on your credit card. After cancelling a plastic with balance, your credit to debt ratio (in other words, credit utilization ratio) will be damaged. This is a correlation of the amount of credit limit you have been extended to and the credit you use. After closing your credit card, the changed ratio will speak of the following: you use too much credit or you spend more than you can afford.

3. If the first and second cases come together, that is you have your only credit card and an outstanding debt on it, keep the card. Otherwise, the bank will think that you have gone over the limit of your credit card.

4. Credit card that seems quite unnecessary is the oldest credit accounts of yours. To be a good credit user, you are supposed to hold credit cards for a long time, which speaks of your reliability.

5. Credit cards you are going to get rid of, have beneficial terms and provide advantageous perks like those with airline miles credit cards. It is ridiculous to cancel beneficial cards!

You are free to close your credit card in these cases:

1. Being a lucky possessor of excessive number of credit cards, you expose your credit history to tangible damage. It is even worse if you are in the habit of being late on your cards or miss payments. So, reduce the number of credit cards to be able to manage your credit.

2. After eliminating debt on one of your newest credit cards, you are free to close it, keeping your credit to debt ratio in a normal condition.

3. Sometimes banks increase interest rates or reduce rewards on their previously low interest credit cards. If you see your credit card is just a time and money loss, close it without hesitation. Your expenses on the pricey but useless card cost more than credit score decrease.

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