HUNTSVILLE, Alabama (WAFF) – Paying off consolidate credit card debt is a great way to strengthen your financial base. However, once you’ve paid off that credit card, what should you do? Should you close this account or just put the card away?
We spoke with a financial expert, Patricia Lloyd of Redstone Federal Credit Union, she said âNOâ, don’t cancel the card. Here are some of the reasons why it is not a good idea to cancel this consolidate credit card debt
- Most credit experts agree that you should wait before closing that credit card account. The reason is the use of credit. The credit utilization rate is the amount you owe as a percentage of your total available credit.
- FICO scores, which most lenders use, are calculated based on five factors and your credit utilization rate is one of them. Experts suggest that you don’t use more than 30% of your limits, and less is better. Charging too much on your cards, or maximizing them, is generally associated with higher credit risk and will ultimately lower your credit score.
- Instead, put the card away or cut it off. Then, to protect it, go to your online bank account and use the card checks to lock the account.
For more ways to save, be sure to tune in at noon every Friday for the âFinancial Fridayâ segment of WAFF 48.
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