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MoneyDecisions101 => Don't Close Your Credit Card Account

If you pay off your credit card, think twice before closing the account!
Why? If you close a credit card account, it can have very bad (detrimental) affect on your credit score.
How? You are basically getting rid of a portion of your credit history and canceling available credit (money source). Since a credit score is calculated based partially on your credit history as well as the amount of available credit, it makes no sense to close the account.

Closing a credit card account has a very bad affect on your credit score when:
1. You have had the account for a long time (long credit history)
2. The account has a large available credit
3. It is your only credit card account

Instead of closing a credit card account, simply pay the thing off and do not use it. 

Here's a great eample:
A few years ago, a best friend of mine had a first hand experience of closing an account. He had this account for many years (since we were in college) and it was his main credit card. After closing the account, his credit score dropped a whopping 82 points!  
Recently, he paid off another credit card. Instead of closing it, he wanted to prevent himself from using it. So, he actually froze the credit card in a block of ice in his freezer! 
Why? That way, he explained, the card is still usable... but inconveniently. He will have to thaw out the card before using it, which will give him enough thinking time, to  prevent unwise spending!


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