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What Happens to Your Credit If You Cut Up Your Credit Cards?

If you have been thinking lately about getting rid of those pesky credit cards that only tempt you into debt, you may have also wondered, “If I cut up these cards, will my credit score go down?”

My wife and I made the decision to cut up our credit cards in February of 2010. We were digging ourselves out of debt (and still are) and we decided that we no longer needed our credit card. In the event of an emergency, we had our emergency fund to pull from; and for all other expenses that might need a card, we had our handy-dandy debit cards!

I really didn’t think about the effect that this would have on my credit score at the time, but I have had a few readers pose the question.

As I researched the question, the simple answer to the question is, “Yes, if you cut up your credit cards, your score will go down.”

The graphic from MyFICO.com shows us why:

The areas that hurt us the most are the Amounts Owed and the Length of Credit History.

Amounts Owed: While it is true that we owe nothing on our credit cards (which is often a good thing, as long as it is in use), since we cancelled them, we no longer have a line of credit on the card, which means that we no longer have a debt to limit ratio. Without a ratio, FICO cannot grade us here, and our score will take a slight hit.

Length of Credit History: Obviously, if we close our account our history with the card will end, causing our score to be affected slightly.

Remaining Categories: By closing our accounts, our payment history (utility bills, phone bills, mortgage payments etc.) will continue; we won’t have any credit inquiries; and it won’t cause us to take on any more types of credit. So, these areas will not hurt our credit score.

And, of course, the next question is….

By How Much Will My Credit Score Go Down??

Of course every case is different, but for the great majority, your score will not decrease very much at all. Over the course of a year, it may go down 10 points. So, don’t worry too much about it. If your credit cards are too much of a temptation, by all means, CUT THEM UP!

Credit Cards

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

13 Comments

  1. Thanks for that awesome posting. It saved MUCH time 🙂

  2. Only 10 points isn’t bad at all!

    I’ve heard of friends freezing their credit cards in ice, so that they are truly only used in emergencies (lol)… They claim that it works 🙂

    • Haha! Yes, I’ve heard of that too! I would love to watch someone hack away at their ice block one of these days. I think that would be hilarious!

  3. Nice post! You hit the main impacts: debt/credit ratio, and average age of accounts.

    One idea: cut up the cards but don’t close the accounts. We can’t use cards we don’t have. And if they have a balance we’re paying down they won’t be closed due to inactivity. Once the payoff is over, we might have gotten so used to not relying on credit that old habits won’t creep back in.

    • APF,

      That’s a good idea too. If we can’t physically swipe the card, it won’t get used (unless of course you’re addicted to the Home Shopping Network and have your card number memorized! 🙂 ) It’s simple, and I like it!

  4. This is something I always worried about, but glad to see that it is not impacted that much.

    PS-I have tried the card in the freezer technique with my debit card….all you need is a little hot water and it comes out pretty quickly. 🙂

  5. My take is that unless you’re paying for the card, you don’t necessarily need to close the accounts. If you’re trying to pay down CC debt, one thing you could do is just cut up the cards so you can’t keep using it, as the accounts will remain open as you pay them down.

    • Certainly a great point. My advice would pertain more toward paying down a car loan or student loans, or perhaps a different credit card. Once a card is paid off, it should be cancelled. Then, move onto the next one.

  6. I have often wondered what would happen if you just cut them up and used cash from now on. The penalty really isn’t that great. I think the amount of money you would save (not spend) would be well worth it!

    • For sure! By using cash, I believe that we are spending much less money. Plus, our credit score is not affected all that much. I would say it’s worth it.

  7. Cutting them up or closed the accounts? My understanding is if the account is closed it still appears on your score with your history ~ if you cut up the card, it will show active on your report, still having a rotating line of credit. I am confused by your posts for good debt is student loans and car notes – bad debt is CC and such high interest rate loans/lines of credit. Not always good to pay down good debt – shows much better to have longevity. especially when going for a mortgage. Isn’t that what most folks are looking to save to get? also not such a great idea to cancel/terminate a credit card just because it is paid off. Remember line of credits are not all bad. I do believe one thing….CASH IS KING! it’s the new dirty word! whisper – cash!


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