In today's digital age, credit cards have become an integral part of our lives. They offer a convenient way to make purchases, earn rewards, and even build credit scores. However, with the rise of online fraud and identity theft, many consumers are left wondering whether it is better to cancel their credit card or keep it and not use it. This article will delve into the pros and cons of both options and provide insights on how to make an informed decision.
Cancelling a credit card can seem like a simple solution to protect oneself from potential fraud or misuse. By doing so, you effectively eliminate the possibility of someone else using your card for unauthorized transactions. Additionally, cancelling a card can help you maintain a clean credit report, which can positively impact your credit score and financial health. However, there are also downsides to cancelling a credit card. For one, it can result in loss of rewards programs that may be tied to the card. Moreover, if you frequently use the card for recurring payments, such as subscriptions or bills, cancelling it could cause inconvenience and potentially lead to late fees or missed payments.
On the other hand, keeping a credit card but not using it can also be a viable option. Some people choose this route because they believe that having a credit card available can be beneficial in case of emergencies or unexpected expenses. Furthermore, some cards offer benefits such as extended warranty coverage, travel insurance, or rental car insurance, which can be valuable in specific situations. However, if you do not use the card regularly, it may contribute to a higher credit utilization ratio, which can negatively impact your credit score. Additionally, if you do not monitor your account closely, you may miss important notifications about suspicious activity or unauthorized charges.
When deciding whether to cancel a credit card or keep it and not use it, there are several factors to consider. Firstly, assess the risk of fraud or identity theft. If you have reason to believe that your card details may have been compromised, it is safer to cancel the card immediately. Secondly, consider the importance of rewards programs and benefits associated with the card. If these features are crucial to you, keeping the card but not using it may be a viable option. Finally, evaluate your current credit utilization ratio and credit score. If maintaining a low utilization ratio is essential for improving your score, it may be wise to keep the card active and use it occasionally.
Another option to consider is freezing your credit card. Freezing a card prevents it from being used for transactions, but it does not cancel the card entirely. This can be a useful solution if you suspect fraudulent activity but want to retain the card for future use. To freeze a card, contact your credit card issuer and follow their instructions. Keep in mind that while a frozen card cannot be used for transactions, it can still be subject to fraudulent activity if the number is stolen or shared with others.
In conclusion, the decision to cancel a credit card or keep it and not use it depends on various factors such as the level of risk associated with fraud or identity theft, the importance of rewards programs and benefits, and your current credit utilization ratio and score. It is essential to weigh these factors and make an informed decision based on your individual circumstances. Regardless of your choice, monitoring your credit card activity regularly and being vigilant against potential threats is crucial for maintaining financial security.