A woman who paid off her credit card debt asks HerMoney CEO Jean Chatzky whether she should close the cards she isn't using anymore.
Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: “I got in over my head with credit card debt. Long story short, I won’t be using my credit cards anymore, but should I close them? I’ve heard your credit score can take a hit if you do.”
A: First off, good for you for getting a plan together for paying off your debt. Second, it seems as though you’ve recognized cutting ties with your credit cards is in your best interest to avoid overspending in the future. That’s a win, too.
While it might be tempting to close your credit cards once you’ve paid them off and gotten them down to a zero balance, closing them could damage your credit score. “The longer you hold a card, the more valuable it is in your credit card score determination,” Kevin Gallegos, credit and debt expert and vice president of Phoenix operations at Freedom Financial Network, tells HerMoney. While closing a card won’t damage your credit score forever, it is a particularly important consideration for people who may be using their credit score in the near future to buy a house, a car, or secure another type of loan.
If you’re trying to curb impulse spending, you can make your credit cards less accessible by putting them in a safe, giving them to someone you trust, or placing them in a bowl of water and (literally) freezing them. “The time it takes to thaw out your credit card may deter your impulse spending,” Gallegos adds.
MORE ON HERMONEY:
- Ask Jean: “Should I Buy Used Luxury Items?”
- Ask Jean: “What’s A CD Ladder?”
- Ask Jean: “What’s The Avalanche Method For Paying Off Debt?”
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