If you have a credit card with a zero balance, you may be able to cancel it at any time without a penalty. There are some circumstances where a cardholder can be charged, so before you consider canceling your zero-balance card, here are a few things you should know.
After paying off the balance on your credit card, is it a good idea to cancel it? The answer is a bit of a “yes and no” situation. Yes, it is generally good to cancel a credit card when the card’s balance is paid up. The reason is that most credit cards offer a zero percent APR promotion for the first few months.
What will happen to Your Credit Card If You Cancel It After It Is Paid Off?
Do you say you’re done paying off your credit card? Don’t do it. After all, that’s what credit cards are meant for—to help you pay for things you want. If you stop paying them, the balance will get paid off, and your credit card will be officially canceled. Will your credit go up? Maybe not. Maybe a little. But the important thing to remember is that no matter what happens, you still have the money you need to pay off the rest of your balance.
It is good to cancel your credit card if you don’t have a need for it anymore.
For a lot of people, the thought of canceling their credit cards seems a little too extreme—after all, they’re still using them for a variety of important things, right? Here’s the thing: if you’re using your credit cards for expenses that aren’t related to the purchase of (frivolous) items, you’re probably paying a lot more than you need to. Many people don’t even realize that their credit cards are still being billed, and it’s not uncommon for cardholders to cancel their cards and have to pay a “drastic” amount of money to take care of it.
If you cancel your credit card, you will lose all of your rewards.
If you cancel your credit card, you will lose all of your rewards. You will think, “Wait, what was my interest rate again?” You will be like, “Oh, I get it, I need to make my minimum payments again.” And then you will be like, “This is stressful. I’m going to cancel my credit card and start over.” But beware! Canceling your credit card will not be as easy as it sounds. You will not be able to go to the bank and just cancel your card, and you will have to call the credit card company and explain why you no longer want to use their services. Also, you will lose all of your rewards, so your credit score will go back to its default.
If you cancel your credit card, you will not be able to make any more purchases with it.
Once you cancel your credit card, the full balance owed will be transferred into your bank account. Unfortunately, if you do not have enough money for this, you will not be able to make any more purchases with it.
Let’s say we’re going on vacation. You want to bring several of your favorite things, but you don’t want to spend all your money before you leave. So, you decide to cancel your credit card. But what happens if you want to buy something that you don’t have enough money to pay? A few days before you leave, you decide to get a new credit card.
Recommendation:
You should cancel your credit card if you don’t use it. If you are not using your card, it will not earn interest, make you pay a higher APR, or cost you a late fee. It’s important to understand that credit card companies have a non-compete clause, and once you cancel a credit card, they will not accept a new one from you for a period of time.
Once you’ve paid off a credit card, it’s tempting to cancel it and stop paying the finance charges. But before you take out that razor blade, consider this: no matter how long you’ve had your credit card, the interest rate will remain on your statement, so you’ll still be paying interest. Even if you pay the bill in full every time, it may be a good idea to keep using that card for your everyday purchases since it will continue to earn you rewards points.