Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

This Isn’t Working Anymore, Visa

And this time, it isn’t me—it’s you. Breaking ties with your credit card is harder than just walking across the kitchen to get the scissors. It often means cutting ties to your easiest way of spending; and maybe that’s a good thing. Credit cards can really get you into trouble and, when they do, the credit card companies only make it worse. They’ll hike up your rate or lower your limit, either of which doesn’t exactly help you pay your bills. So what’s the best way to tell your plastic pal it’s over?

One option is to close the account. If your rates are rising and you aren’t paying your balance in full, it is costing you money right out of your pocket. “But James, won’t it lower my credit score to close my card?” Well, maybe, but it is too hard to say by how much or for how long. Plus, having too many open accounts can lower your score too. It seems that it would be safer to go with something that may cost you some money as opposed to something that will definitely cost you more money.

You can open up a new credit card account to make up for the loss in credit points—but you’ll definitely want to set some ground rules before you jump back in. You could try a smaller credit union instead of a big bank. A small bank may have fewer tendencies to change your account without warning. You should also set a budget that you can stick to for your credit cards.

If you can’t secure another credit card because of your payment history or low credit score, you may want to consider options to relieve your debt. A chapter 7 bankruptcy actually wipes most of your debt and gives you a clean slate to start from—and build good credit. In most cases, filing the bankruptcy actually improves someone’s credit score, assuming they don’t make late payments on anything after filing.