Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What You Should Know before Closing out A Credit Card

When closing out a credit card, the effects it can have on your credit score lie in the details.  Here are some important facts you need to know before closing out your card.

  1. Age Matters. The age of your credit card that is. The average age of your open accounts makes up 15 percent of your overall credit score. So if the card you are closing out has been open for a long time, it really is better to keep it open and pay it in full, otherwise your score will be negatively effected.
  2. Available Credit. Your credit utilization ratio is important. A low credit utilization ratio would be if you have $300 or less on a credit card that allows you to spend $1,000.  A high credit utilization ratio is if you have $993 in charges on a card that gives you a credit limit of $1,000.  Lenders do not like you to do this and your score will be penalized as a result.
  3. Automatic payments. If you have been using your credit card to make payments on your car insurance or electric bill each month automatically, make sure and update this information timely before closing out the card.  This way you can avoid getting hit with late fees and other penalties.
  4. Rewards. If you have accumulated reward points on your credit card, redeem them first before closing out the card.  Otherwise you will likely lose them.
  5. Verify. It can take up to a month or two before the account is closed, so keep that in mind. Mistakes on credit reports are also fairly common. In fact, a recent study revealed that one in five consumers have at least one error on their credit report. It is always a good idea to double-check your account has been completely closed out.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at

Related Resources: