While there are some advantages to consider when it comes to keeping your credit cards, there are also some advantages to consider when it comes to closing them all out, too. Some of these benefits include:
No financing charges
Even without debt problems or poor spending habits, it’s important to remember that credit cards are not free to use. Although there are plenty of credit card options out there that don’t impose annual fees, they all come with interest, with the exception of zero-percent introductory offers. Unless you automatically pay off everything you charge right away, you’ll be paying more for your purchases by paying interest. The longer you take to pay off your purchases, the more you’ll pay.
Less likely to become a victim of identity theft
Although you might no longer be using your credit cards, it doesn’t mean it’s impossible for somebody else to get a hold of your information and use them. Although the odds are low—especially if you aren’t using them anymore—simply having your accounts active can make it possible, and the risk of identity theft and credit damage can be higher if you aren’t monitoring those credit cards.
If you have a lot of credit cards, perhaps getting rid of every single one isn’t the answer, especially if you’ve gotten your spending habits and credit card debt under control. But if you really do have so many credit cards—to the point where they’re difficult to keep track of—you might want to just hang on to one or two, and get rid of the rest. When making your decision, you’ll want to focus on the credit cards with lower interest rates, higher credit limits, or ones that offer a rewards program that you’re taking advantage of. Ideally, you’ll want to keep the credit card that you’ve had the longest.
If you’d rather be done with credit cards once and for all, one option that could work well for you is a prepaid card. Prepaid cards work similarly to debit cards, except they are not linked to your bank account and they are reloadable. Depending on the prepaid card product you go with, you can make deposits over the phone, online, or even in person (which can be handy if you need to load your card with cash). With a prepaid card, you can do pretty much everything you can do with a credit card, such as order things online. Unlike a credit card, you aren’t charging on a line of credit and you won’t need to pay back anything you do use the card for, since the available “credit” is the money you loaded onto the card.
Do you need extra cash to pay off credit card debt? Peachtree Financial Solutions may be able to help if you’re receiving long-term annuity payments. Contact Peachtree Financial Solutions today to learn more about selling future annuity payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.