Closing credit cards with a balance left on them to pay them off?
Yahoo Answerer asked:
I want to make a new years resolution to pay off my credit cards, and I want to close them out to make sure I don’t get tempted to use them. Will that look bad on my credit score if I close them out, when they still have a balance? Also, do they carge extra for doing that? Thanks for ANY advice on this!
Ida
I want to make a new years resolution to pay off my credit cards, and I want to close them out to make sure I don’t get tempted to use them. Will that look bad on my credit score if I close them out, when they still have a balance? Also, do they carge extra for doing that? Thanks for ANY advice on this!
Ida
Sally
pay the balance off then close them…….there shouldnt be any extra charges
Andre
I have never heard of a financial institution that will close your account when you still owe them money. Just stop using the cards and pay them off.
Jeanne
I did that with one of mine, there was no charge for not being able to use the card since it was a closed account. BUT you will get charged late fees and stuff like that if you’re late on your payments. I did settle with one of mine and transfered the settling balance to another card. The card I settled with cause a minor hit on my credit, which was fine with me because it was way out of hand and I didn’t want it gong to creditors. (Although policies could differ bank to bank)
You can talk to them when you cancel the card and they will let you know all the details. It’s their job.
Lori
Most credit card companies won’t actually let you close out the card with a balance due. You can destroy your cards, though so that even with an open account you can’t use the card.
Keep one or two with the best interest rates, (pay these off last) for emergencies.
Pay off the maximum amount you can on the highest interest rate first, while paying minimums on the other cards. Once you’ve paid off the highest interest rate, go to the next highest rate and pay that one the same way (max that while paying minimums on the others.) Do that until you’ve paid them all off. Close the cards out as soon as you make the final payment until you’ve worked your way down to zero carried balance on the card(s) you are going to keep. Pay these off every month and only use them for things you can pay off at the end of the month except in an emergency.
Good luck. Resolving debt is a good New Year’s resolution.
Shane
I do not believe they will allow you to close them with a balance on them.
Carlos
Greetings!
Analogy. A credit card debt is just like any debt or loan or credit. One gets to avail of the credit limit then gets charged of interest subsequently monthly, based on the ADB ( average daily balance ) of the outstanding debt / availment.
First of which the lending unit, the credit card company will not allow you to close the card with an outstanding balance. OR they will indeed put the card on hold / standby status - but will likely declare it as past due. That will reflect in credit ratings of certain loan indexes / databases for existing credits related to credit cards and consumer loans. Credit standing will definitely be not good.
IF you have availed of a certain credit accommodation which has a fixed term, likely they will charge you for what we call as PRETERMINATION CHARGES or PENALTY. They stipulate that when you avail of this. Otherwise, if it was not discussed with you - or you are indeed having doubts, you better discuss facts with the credit card company. You will probably ask why are you being charged ( even if you are going to pay for the outstanding balance already?). COST subsequently comes into view. The creditor extended a loan or credit but of course at a certain cost. Then they add SPREAD or additional interest over the actual COST of securing the funds lent to the borrower. Then INCOME is computed out of that. Income of the creditor I mean.
My advice, if you really do not want to be tempted to use the credit card again - have it suspended on the basis that you are trying to manage your funds. Or rather think of literally cutting the card. WHAT WILL BE MOST IMPORTANT is to still pay the minimum amount due if not the whole oustanding balance. In that way, even though the card is not being used, the payment it still continuous - and will still be interpreted as good credit.
You may also want to consider leaving the card at home. At that idea, you will not be tempted to use it or will be cautious or even make you think twice of buying something because you are now paying an item in cash.
Credit is good, as long as it it managed well. PRINCIPAL IDEA utilized by creditors : When is a credit / loan successful? Answer : WHEN THE LOAN GETS PAID, on schedule and ideally was utilized for its actual purpose.
See you around.