Is It Smart to Cut Up Your Credit Cards When They’re Paid Off?

Written By Mary Beth Eastman
Last updated April 28, 2020

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March 6, 2018

Simple. Thrifty. Living.

Getting a credit card balance down to zero is a fantastic feeling, and you may be tempted to cut up the credit card once it is paid off in order to avoid getting into debt again. But taking such action isn’t actually always a good idea. There can often be great benefits to having credit cards with a zero balance, even if you don’t intend to use them again.

Before you cut up your credit cards once they’re paid off, consider these pros and cons so that you can make a wise decision for your financial future.

The most obvious benefit of cutting up a credit card with a zero balance is that it won’t be available to tempt you into using it again and possibly running up a new debt. It certainly feels great to get rid of credit cards you no longer need. And in all honesty, the above pretty much sums up all the pros of canceling and cutting up credit cards. Because the truth is, doing so can actually result in several cons ….

Your credit score could suffer — when calculating your credit score, the credit bureaus take into account the amount of debt you have versus the amount of credit you have. If the percentage of debt to the overall amount of credit you have is pretty high, it could cause your credit score to drop. Keeping a card with a zero balance means you have more credit available to offset any debt you might still have on other cards.

Maintaining a good credit score is also important for getting a personal loan, a car loan or a mortgage as well as renting a home or apartment, signing up for utilities and, in some situations, even getting a job.

If you feel you must cut up your credit card in order to avoid getting into debt again, then, by all means, do so. Just don’t cancel the card. Or if cutting up the card seems too harsh, you can simply hide it somewhere in your home and make it difficult to access. This way, you won’t be carrying it with you all the time, and you won’t be able to simply grab it and use it without some thought first.

However, if your credit score is already in good standing and you see no major need for loans or moves in the future, it is safe to eliminate an unnecessary credit card for now.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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