Optimal Finance Daily - Financial Independence and Money Advice
3008: Should I Have Closed My Credit Cards by Sam of Financial Samurai on Financial Wellness
Jan 17, 2025
Sam from Financial Samurai, a financial expert known for his insights on personal finance, discusses the impact of closing credit cards on your financial wellness. He shares practical advice on managing credit responsibly, emphasizing how credit history and usage affect your score. Sam cautions against closing cards without assessing their benefits, especially if they have no annual fee. The conversation also touches on overcoming spending temptations and the importance of timely payments to avoid high interest.
09:17
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Quick takeaways
- Closing credit cards can adversely impact your credit score, so it's crucial to weigh the implications carefully before doing so.
- Effective credit card management involves strategic decisions like keeping no-annual-fee cards and actively monitoring your credit accounts to maintain financial health.
Deep dives
The Impact of Closing Credit Cards on Your Credit Score
Closing credit cards can negatively affect your credit score, making it essential to consider the implications before doing so. Maintaining at least one credit card is crucial for building a good credit history, and it's advisable to keep cards with long credit histories, as they positively contribute to your credit score. Additionally, cards with high credit limits play a significant role in your overall credit utilization, so closing them could reduce your available credit substantially. Therefore, understanding your credit situation and assessing each card's relevance is key before making the decision to close any accounts.
