Financial Education (US)
What happens when you close a secured credit card?
Do you have a secured credit card? If so, you may need to know what happens if you need to close your Secured credit card! So, keep reading to understand more!
Find out what happens when you close your secured credit card and learn more about secured cards!
What can happen when you close a Secured credit card? Does your credit score get affected? Well, we can help you understand more about how to close your secured credit card and if it’s the best option!
Secured credit cards can offer many benefits for those who have low scores. You can use your secured credit card to help you build credit. Also, you can do many other things to help you live a better life.
However, you may have many reasons not to want to use your secured card anymore. You might have increased your score and now need an unsecured card. Also, you may just not need a card anymore.
Whatever the reason you may need to end your secured credit card contract, we can help you understand how to do it safely.
Also, you can learn more about how your secured credit card works and if you should really end the contract right now. So, keep reading to learn more about secured cards and how to end their contract.
Technically, if you want to end your secured credit card contract, nothing bad will happen. However, as everything can have consequences, you might want to know what can happen.
Also, many people use their secured credit cards to help build their credit score. So, we understand that this is a major concern when you need to end the card contract.
You may have many reasons not to want your secured card. However, it’s important to understand the consequences of closing a secured card before you make any decisions.
The consequences of closing a secured card may vary according to the credit card provider. But we can talk about what usually happens in this case. So, keep reading to learn more!
Can you close your secured credit card?
You can end your secured credit card contract at any time. However, you need to see if your balance is fully paid. Or if you don’t have any remaining debt.
In case you want to end your secured card contract to try to get a regular credit card, you can’t have any debt.
This way, you’ll be able to have a high credit score to get a better credit card. However, if you still have some debt and a poor score, we advise you to keep your secured card.
Also, you’ll need to use your secured card properly. With this, you’ll be able to increase your score and finally get an unsecured card in the right way.
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Does not using your secured credit card hurt your credit?
If you close your secured credit card, your credit score may get impacted. This can happen because the credit bureaus won’t have your monthly payments anymore.
Also, the credit bureaus consider your credit utilization when calculating your score. This way, if you don’t have a credit card anymore, you also won’t have a credit limit.
With this, your credit score can suffer an extreme impact. However, if you just don’t use your secured credit card, your credit score probably won’t get affected.
If you pay your credit card bills on time or if you just don’t use them, you’re still with a credit card. And this card will still send your monthly payments to the major credit bureaus.
Moreover, it can be good to pay for just some things with your card and make your payments on time. This can make a good impression on the credit bureaus.
For how long should you have a secured card?
Most people only use secured credit cards until they have a high enough score to get an unsecured one. This happens because most secured credit cards don’t offer any rewards or perks, and they charge high fees.
Also, if you only get your secured credit card for some years until you increase your credit, you can end your contract.
However, you need to make sure that you can qualify to get an unsecured credit card once you have a high credit score. If you don’t get another credit card, your credit score may lose some points.
Also, you can choose to keep your credit card open if you don’t really mind the fees. And if you find a secured card that has no or little fees, you can keep it to increase your score to its maximum.
How to end your secured card without hurting your credit
It can be almost impossible to end your secure credit card contract without hurting your credit. However, you can do some things to help minimize the impact.
You can have many reasons to end your secured credit card contract. If you can’t make your payments on time and have responsible credit card use, you might need to close it.
Also, if you don’t really use your card much, you may be paying fees and not getting any benefits. Therefore, you may need to close it.
However, you need to be sure that you’re ready to upgrade to an unsecured credit card before you leave your secured one.
This way, you’ll be able to keep still increasing your credit score and find your way to a healthy financial life!
Do you get your deposit after closing your secured card?
As we mentioned, if you need to end your secured credit card contract, you’ll need to pay off your debts first. So, you’ll need to check your credit reports, pay everything you owe, and end your contract.
However, you may be wondering if you will get your initial security deposit back after ending your contract. Well, this depends on the credit card provider.
With most companies, you can get your deposit back after you pay off everything and close your account.
And if your credit score dropped out of nowhere, check out our post below to know what could have caused this!
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