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Credit Card Cancellation a Necessary Step for Financial Freedom

Getting out of debt starts with getting out of debt! You must proactively free yourself from your current debts to actually embrace the moment of being out of debt or debt free. Many do not consider canceling their credit card debt, mostly because creditors do not realize the benefit and strength of this option. This article will give you advice and reasons for canceling your credit cards.

Canceling your credit cards can be a positive boost for your pockets. Many people do not realize the option of canceling credit card accounts and therefore continue to destroy their credit to the point of no return or worse, skip this option and go straight to bankruptcy. Bankruptcy should be the very last option for anyone struggling with debt. You should first try everything imaginable before filing for bankruptcy. If you haven't already canceled your credit cards then bankruptcy should not be in your thoughts just yet.

In most cases, it can negatively affect your credit rating to cancel a credit card. A percentage of your credit score is based on the history that has been established with your credit accounts. However, there are times when canceling your credit cards can be an effective decision. Use these guidelines to know when you should cancel your credit cards:

Cancel Your Credit Cards with Zero Balance. Canceling a credit card with zero balance has the least effect on your credit score. When you cancel a credit card with a zero balance, it does not affect the portion of your credit score that is determined through your debt to balance ratio. Your credit score may see an impact from the canceling of the credit card, but this can be increased over a period of time.

Cancel Your Credit Cards if you are Unable to Stop Spending. Credit cards with zero balances and increasing credit limits can be tempting to those consumers that are living on a tight budget and have faced debt problems in the past. If you are one of these consumers then canceling the credit card may be your best option, rather than live with the tempting credit line. This is a sure way to avoid future debt and is worth the small drop that may occur in the credit score.

Cancel Your Credit Cards if You Have Multiple Accounts. Canceling your credit card if you have multiple accounts can reduce the risk of identity theft. When you request a copy of your credit report, you may even be surprised at the amount of accounts which are shown open! Some of these accounts may never have been used after being activated, often; if these accounts are not closed then they can remain open for years, thus increasing the risk of identity theft or fraudulent activity.

Cancel Your Credit Cards if You Have Established Negative Credit History. There are some instances that consumers have established negative credit history from their credit card account. If you have missed payments or have had numerous late payments then you may benefit from canceling the credit card. It is important to avoid these behaviors and ensure that positive credit history is created from the first month that the credit card has been opened. Note, canceling your credit card does not free you from the debt, you will still be responsible for paying off the current debt but by canceling your credit card accounts you will not incur any more credit card debt.

Canceling your credit cards can be as easy as contacting the credit card company to request the cancellation. The credit card company may resist your request, but it is important to be direct and not waive the decision to cancel the credit card.

If you intend to open a new loan account in the next yearFree Articles, then the credit card account should remain open. This is an important factor in the credit rating and therefore it is important to take measures to increase and maintain the credit score rather than closing accounts which may prove negative to the credit score.

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Michael David is an expert writer who has years of experience writing and producing quality content. For anyone who is having financial troubles and wish to live a debt free lifestyle then I'd recommend reading Dave Ramsey's Total Money Make Over: A Plan for Financial Fitness. It is a financial guide and strategy for living a debt free. Dave Ramsey is a world renowned financial guru, with a track record for helping families get out of debt.

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