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Shoppers Advised to Close Store Cards Wisely After Holiday Season

By Faye Mergel
Published: Friday, December 18th, 2009

It is holiday season once more, the time when gift offers and huge discounts are everywhere. It is also a time when shoppers sign up for those store cards offering 15 to 30 percent savings. However, experts note that there are many consumers who do not know how to close their store cards properly after the holiday season. This creates negative marks on their credit report, which affects their finances the whole year round.

Shoppers Advised to Close Store Cards Wisely After Holiday SeasonSpecialists advise against the use of store cards for everyday purchases. However, if they offer huge discounts for the holidays, experts say there is no reason not to sign up for them. However, they must be closed properly, after they have served their shopping purpose.
Department stores do not forget a shopper’s debts; they immediately report any payment that a consumer misses to the credit bureaus. To avoid ravishing their credit report, consumers are advised to pay their accounts off right after the holidays. Specialists say it is best to pay off their account balances by January or February next year.

Specialists urge consumers and holiday shoppers to close their store cards once they pay off their balances. When they do so, they must tell the store to note on their credit report that the account was closed upon request of the card holder. This way, it will not have any effect on a consumer’s score.

Consumers are told not to worry that a closed store card on their credit report will adversely affect their score. Experts say store cards do not affect any rating because they typically have very low available credit limits. Typical limits run from $1,500 to $2,000. Closing a store card, on the contrary, might actually help a consumer’s credit score.

If a shopper uses $1,400 of his available $2,000 limit, she is using more than 50 percent of her credit. Since every activity a consumer makes is recorded on a credit report, including store purchases, maxing out a limit could hurt a score. However, if he pays off his balances and closes his store card immediately after doing so, it might actually help his rating. Specialists say, at worst, a closed store account will have no impact on a consumer’s score.

Finance advisers say shoppers will not have any trouble paying off their accounts and closing them if they avoid spending too much this holiday season. They add that shoppers and card holders should also avoid opening too many accounts since this will likewise be noted on their credit or financial report.

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