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Resist the Urge to Close Your Credit Card Accounts

Thursday, 7 May 2009 | 9:38 PM ET
Getting A Rate Redux
Three ways to negotiate a lower credit card rate, with CNBC's Carmen Wong Ulrich.

If you have the misfortune, like so many others, of getting a letter from your credit card company informing you that they’re changing your terms – even if you’ve been an upstanding credit user – you’re first reaction might be to close your account. If they don’t want your business, they don’t have to have it. That’ll show them, right? Wrong.

John Ulzheimer says that the notion that you should walk away from your credit cards, even if you’re being abused, is misguided. Instead, he says, put your emotions aside for the sake of your credit score. Here are his three reasons why not to close your credit card account, even if your rates are being raised or your limits are being lowered.

1. The damage to your credit score. The act of closing an account isn’t what hurts you – it’s the sudden loss of the credit limit that card provided, even if it had been drastically lowered by the card company.

2. You lose access to capital. Credit cards exist to help us live more efficiently, and once the Credit Cardholder’s Bill of Rights passes in 2010 you may not get that capital back if you ask for it after canceling your account.