Dear Liz: Like many in this economy, I overextended myself with credit card debt. Fortunately, most of the cards are now paid off, although some of my creditors have lowered my credit lines. (The card I use for my design business has had its limit lowered, for example.) You always tell consumers to keep cards open to protect their credit scores. Because I have so many cards, though, I would prefer to close the accounts that have the highest interest rates. I plan to use just my American Express cards because they must be paid in full every month.
Answer: Your best course is to wait until all your debt is paid off and your credit scores have recovered to decide about closing any accounts.
Because account closures can’t help your scores and may hurt them, you typically should put off closing cards until your FICO scores are above 750. Even then, you should avoid closing your oldest and highest-limit cards, because those help your scores the most.
In this economy, you also want to be wary about cutting yourself off from credit, particularly if you run a business. You may need to tap those funds in an emergency.
If you really can’t control your card use, of course, all these considerations are moot. Then closing accounts may be the only remedy. But the fact you’ve been able to pay off most of this debt indicates you have self control, so consider waiting before making any moves you may later regret.
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