Is It Bad to Cancel Your Credit Cards?

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If a person cancels credit cards that are being reported to credit bureaus, then the cancellation can have a negative affect on credit ratings. Find out how to pay off credit cards in a systematic fashion with help from a registered financial consultant in this free video on money management and financial advice.

Part of the Video Series: Money Management
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Video Transcript

This is financial adviser Patrick Munro, and I'm talking about today, how to- is it bad to cancel your credit cards. Well, if you have setup credit cards and your cards are being reported to the credit bureaus, and there are three of them, Experian, TransUnion and Equifax. Canceling those credit cards outright can definitely affect your credit in a negative way. Rather, you should pay off the credit cards in a systematic fashion down to a point where there is successful activity, and you should always maintain about a 20 percent advance on the credit cards, nothing more than that. That will achieve the optimum reporting range for the credit cards and give you the very best credits that you have available out there. Canceling a credit card in today's system will definitely affect you in a negative way and should not be undertaken in any particular time, it will affect your credit. This is Patrick Munro, financial adviser, talking about canceling credit cards.

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