Credit Card: If you are not using a credit card then what is the right thing to do? Make a decision after understanding these things

Should you close your unused credit card or keep it open?Credit cards serve as an important financial instrument. It proves to be helpful in meeting all kinds of financial needs easily. Using a credit card gives the user the facility to shop online and offline in the same billing cycle, as well as the opportunity to avail many benefits like cashback, reward points or discounts on select brands.

Despite all these benefits, the question that arises in your mind is whether to close the credit card or keep it active? If you are taking a new card and think that the existing card is no longer needed, then you can consider giving up your old card. However, the decision to close your credit card should not be taken in a hurry, even if it is no longer needed.

Also read: Senior citizens have a good opportunity to earn money, this bank is offering up to 9.75% interest on FD

There can be many reasons for closing the existing credit card. However, there can be some such factors, after knowing about which, you will not be able to leave your existing credit card easily. If you have more than one credit card and you are thinking of closing or cancelling any of them, then understand these things before taking this decision.

These are the benefits of closing your credit card

Elimination of annual charge fees

Many credit cards have annual charges, which can range from a few hundred to several thousand rupees. If you feel that you are not using a particular card frequently, then it may be a good idea to close it. By doing this, you can avoid annual charges.

You can avoid unnecessary expenses

Easy access to credit cards often leads people to spend on unnecessary things. In such a situation, closing the card can help reduce unnecessary expenses and stay within your financial limits, resulting in better financial management. Moreover, managing multiple credit cards can be challenging as each card has different billing cycles, due dates, and rewards systems. Closing more than one credit card will reduce the burden of monitoring household financial progress, increase awareness of payments made, and prevent the possibility of late fees.

Also read: Mutual Fund: 9.5 lakhs accumulated in 5 years with SIP of just 5000, this infrastructure fund gave around 48% annualized return

Decreases the risk of identity theft

The more credit cards you have, the greater the chance of identity theft. In such a situation, closing unused credit cards will reduce the chances of the user’s personal information falling into the wrong hands.

You can avoid the burden of heavy debt

Having too many credit cards with high credit limits can lead to huge debts. If you are not keeping a track of your expenses and finances, you are likely to end up with too much debt. In such a situation, by closing the cards that are not in use, you can avoid the temptation of taking on debts that you cannot repay on time.