Thanks to the introduction of credit cards, you can be broke and still have enough money to spend. Credit cards offer individual’s loans that can be used to make purchases, balance transfers, etc., and require that you return the loan in the future. When using this card, you’ll need to make at least the minimum payment each month by the due date on the balance. While a credit card has several benefits, using one may end up roping you in lots of debt. If you are fed up with your credit card, you have two options; let it expire or cancel it. Which is better?
Cancelling your credit card is the fastest way to get rid of the card, but, the disadvantage here is that it has some effect on your credit score (especially if you have a balance). On the other hand, letting your card expire might take a long time, but it wouldn’t affect your credit score in any way.
If you ask some financial experts, they’ll advise you against requesting a credit card. They’ll give reasons such as the tendency to incur a huge amount of debt, inability to pay the minimum fee, high interest, and other reasons. Owning a credit card has its good and bad sides. If you are currently experiencing the bad side and want out, what is the best option? Canceling your credit card or leaving it to expire? You’ll find out below.
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Is It Better to Cancel a Credit Card or Let It Expire?
You are done with your credit card and want to get rid of it. But there is a small issue. You don’t know the best way to get this card off your neck. Do you cancel it ASAP? Or chill till it expires? I have provided you with the best alternative below. But before you rush to see it, here are some interesting things to note. First, let’s start with want canceling a credit card means.
Canceling a Credit Card: What Does It Mean?
A cancelled credit card rarely has a good result. Your credit score may plummet, particularly if the credit card still has a balance because it increases your credit utilization. But, the good news is that your credit score can rise over time as you cut down your credit card debts. Cancelling your credit card doesn’t free you from paying your debts. You’ll still be liable for making at least the minimum payment till you have completely paid off what you owe.
Why Does Credit Card Expire?
Credit cards aren’t everlasting, hence one the reason for expiring dates. These cards have expiration dates for multiple reasons. The first is to allow for the usual wear and tear of the physical card. (Only the card itself expires, not the credit card account.). The chip embedded in the card can get damaged, and the plastic can break. So at certain times, normally every three years, your credit card company will mail you a new card.
The second reason behind a credit card expiration is fraud prevention. Whether you are using the card in person, via the phone, or online, the expiration date offers an extra data point that can be checked to ensure that the card information is correct and you are the actual owner.
Other reasons for expiration dates: They provide the card issuer with a marketing opportunity and a chance to re-examine the terms of the credit card according to your current creditworthiness. Card companies also may use the expiration date as an opportunity to send you a card with the latest design or logo.
What to Do When Your Credit Card Expires?
As I said earlier, a credit card expires. And when it does, what do you do? You see, most credit card companies send out notice of your credit card renewal, including a new card 30 to 60 days before the expiration on your current credit card. Other companies will send you a letter or email requesting if you would like to get a new card.
Confirm That the Credit Card Terms Are Still the Same:
Before accepting your renewed card, ensure you confirm that there have been no changes to the credit card terms and conditions. Verify that the APR (annual percentage rate) and the interest rate you pay, didn’t change. In addition, make sure that payment due dates, fees, and penalties are the same before renewing your credit card. Rather than being stunned with the new details of your card after renewing it, get all the facts first. Doing so will surely save you from a lot of potential troubles and difficulties.
Activate Your New Card:
Before you proceed to use the renewed card, you will need to activate it. Normally, the card will come with a sticker showing a website address where you can activate it or a toll-free number to call. After activating the card and adding your new credit card to your wallet, ensure you destroy your old card or throw it away (in a safe place). You definitely don’t want your old credit card info getting into the wrong hands. Lastly, ensure you update any automatic payments you have been making with the credit card to mirror the new card details, like the new expiration date.
Cancel a Credit Card or Let It Expire: What Is the Best Option?
Many people out there are fed up with their credit cards. If you are among those people, what do you do? Do you cancel it or wait for the expiration date? Canceling your credit card may hurt your credit score (especially if you have a balance). When you deactivate an account, you end up losing the credit limit available on the card. This will raise your credit use or the percentage of credit you are using, hence causing damage to your credit score in the process. Thus, rather than cancelling a card, it makes sense to let it expire. You should only cancel a card in severe circumstances.
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What Happens if You Let a Credit Card Expire?
Normally, one would expect to use a credit card for a lifetime due to its importance in our financial life. But, the truth is that a credit card, like a few of our possessions, have an expiration date. On the expiration date of your card, it will stop functioning. While many of us act before our cards expire, others let it to. If you are fond of the latter, what happens?
If you let your card expire, you won’t be penalized, neither will your account be closed. What happens is that you’ll be provided with a new card if you are interested in having one. But, typically, a credit union or bank issues you a new card 30 to 60 days before the card expires.
If you are fed up with your card, reject a renewal. It is the best way to get rid of a credit card you don’t want.
