Pros & Cons Of Terminating Your Credit Card

Fatin Haris

Fatin Haris

Last updated 15 November, 2022

Reasons you want to terminate your credit card may include you feeling like the credit card has ‘possessed’ you constantly, the rewards and perks of the card don't make sense anymore, or a lifestyle change. If you’ve been thinking about terminating your credit card, try to weigh these pros and cons before jumping to decisions. 

Pros Of Terminating Your Credit Card

No credit card, no debtPros Of Terminating Your Credit Card-No Credit Card, No Debt

Calling a shaman on yourself cause you just couldn’t stop swiping your credit card? You’re not alone in this, most credit card holders didn’t even realize that they’re spending more than what they can afford! If you’ve tried all methods to control your spending nothing seems to work, by all means, please terminate your credit card. 

Free from credit card feePros Of Terminating Your Credit Card-Free from credit card fees

It's time to close your credit card if you can’t keep up with all the fees. If you’re paying the annual fee for a credit card that you didn’t use or feel the annual fee and perks don't add up anymore, time to call your credit card provider and cancel the credit card. Always make sure the thing you’re paying for, adds value to your life!

Fewer credit cards to managePros Of Terminating Your Credit Card-Fewer credit card to manage

Keeping track of credit cards is not easy especially if you actively swipe all of them. To make things worse, you can only access your credit card statement a few days after you make a purchase making it hard to keep track of your spending. Canceling one credit card would ease your life a little.

Now that we've gone through some of the reasons we would give you green light to cancel your credit card, let's dive into the cons of terminating your credit card.

Cons Of Terminating Your Credit Card

Your credit score will be affectedCons Of Terminating Your Credit Card-Credit Score will be effected

The reason why most people get a credit card is to build their credit score so it’ll be easy for them to get financing help when they need it. When you decided to terminate your credit card, your credit score will be impacted. 

If you’re closing a card with a good payment history, you’re deleting all the evidence that you’re a reliable borrower that banks love. Keep in mind that you won’t get back that payment history. The only way to get it back is to build it up again from scratch.

Increase your credit utilization ratio
Cons Of Terminating Your Credit Card-Increase your credit utilization ratio

Credit utilization ratio is the sum of your credit card debt divided by your credit limit. A low credit utilization ratio indicates you're using less of your available credit and are capable of managing your expenses and a high credit utilization ratio shows that you are not a reliable borrower. 

“So what if I have a high credit utilization ratio? I’ll just pay the interest” 

Of course, you can pay the interest, but remember credit score is like an exam at school. You need to constantly study to get the best result. Neglecting your studies throughout the year and only revising the night before the exam is the recipe for failure. The same goes for paying your credit card on time just once wouldn’t do the trick.

The key to having a healthy credit utilization ratio and good credit score, in general, is to pay your credit card on time consistently. To get a good credit score, your credit utilization ratio needs to be at least 30% or lower. 

Read also: Ultimate Guide On Using Credit Cards Responsibly

Harder to get low-interest loans
Cons Of Terminating Your Credit Card-harder to get loan

In the previous point, we’ve discussed how terminating a credit card would hurt your credit score and banks will be reluctant to offer you a low-interest rate loan or worse, refuse to offer you any loan at all!

Whether you choose to keep a credit card or terminate one, be sure to weigh the pros and cons of your decision and always make an informed decision. Read up and get information as much as you can. Follow us to learn more about finances.


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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