To Close Or Not To Close (your credit card account after settlement)

To close or not to close, that is the question. Whether it is nobler to close you credit card accounts after settlement or not remains a burning question for many consumers. But the question is more than just a financial concern, it’s a habitual and mental concern as well. Many consumers have a relationship with their credit card, which is one of the reasons they got themselves into debt in the first place, and ending that relationship, which was probably of many years, can be extremely difficult.

Settling your credit card debt is a financially freeing experience, but don’t run off to celebrate by using your credit card to pay for the alcohol. You and your credit card have been through some great times together. I mean, there was that cruise in the Bahamas a few years back, those shopping excursions where you got the little black dress that made your ex jealous, and the late nights treating your friends to another round.

The long relationship that you had with your credit card was about more than just money. That relationship was about celebrations and new beginnings. Your credit card relationship probably got you through some really tough times as well. For many years you and your credit card were like peanut butter and jelly. But, when the time comes to possibly say goodbye, it’s not as easy as many say.

After you settle your credit card debt and pay off your balance, it’s hard to decide whether to close your credit card account or keep it open for “emergencies.” That’s what we all say. The credit card is in my wallet strictly for “emergencies.” Sure, I can totally understand that reason, but needing a pair of shoes for a new outfit does not constitute an “emergency,” as much as you would think it does.

So, what do you do with your credit card after settling your debt? You keep it open, but you cut it up and throw it away. Do not close your account. If you were to close your account immediately after settling your debt, you’ll be running the risk of a longer credit score recovery period. By closing your credit card account, you will be brining your total available credit down by probably a huge amount. With your total available credit lowered, your credit score will take longer to recover. The more available credit that you have, and haven’t spent, the more likely you are of getting your credit score back up.

I know, it sounds like a bit of a catch-22; keep your account but trash your card. And cutting up your long-term relationship with this credit card might bring tears to your eyes. But, trust me, if you want your credit score to recover, and you want enjoy your financial freedom, toss out the card. Old habits die hard, and there will be no 2am phone calls or run-ins at the club in this relationship. Cut up your card, and that way you can keep the account open without the urge to spend.

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