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5 Credit Cards You Should Never Close

Many consumers close credit cards after becoming what seems like too delinquent to catch up. There seems to be the notion that closing cards makes delinquency go away. Not only is this not the case, closing out a delinquent credit card will hurt your credit more than it will help.

Here are five credit cards that you should never close.

1. Any credit card that still has a balance.
   When you close a credit card that has a balance, your total available credit is lowered to $0. Since you still have a balance on that credit card with no credit limit, it looks like you’ve maxed out. The amount of debt you have is 30% of your credit score; so a maxed out credit card, or one that appears to be maxed out, can have a very negative impact on your credit score.
2. Your only credit card with available credit.
   Closing out this card will decrease total available credit and increase your credit utilization, which, as before, is not a desired situation.
3. Your only credit card.
   Since part of your credit score into consideration the different types of credit you have, keeping a credit card in the mix will add points to your credit score.

You could get turned down for a credit card in the future because the creditor thinks you don’t have enough experience with credit cards.

1. Your oldest credit card account.
   Closing out your old credit cards shortens your credit history. Lenders tend to view borrowers with short credit histories as riskier than borrowers with longer histories.
2. The credit card with the best terms.
   Why let a good thing go? If you have a credit card that has a low interest rate, no annual fee, and other perks like travel insurance, keep it. A credit card that charges you less for making purchases is far better than one that charges you more.

It’s ok to close out a newer credit card that you no longer use as long as the card does not have a balance and you have other credit cards.

In identity theft and fraud situations, your creditors will advise you to close the credit card to keep the thief from damaging your credit even further.

The proper way to close a credit card is by sending a written notice to the card issuer. For your records, you should request written confirmation that the account was closed in good standing.

You should be just as selective about the credit cards you close as the ones you open. Before you pick up the phone to alert your creditor that you want to close your account, make sure it’s not going to affect your credit score in a negative way.

Taken from: credit.about.com/od/toughcreditissues/a/closecards.htm - 22k

Let me know what you guys think!  It looks like great advice to me, and now is the best time imaginable to protect your credit...interest rates are at historical lows and good credit scores will mean even more savings!