By Laura Reginelli
Nowadays credit cards are a fact of consumer finance. It seems as if most people prefer to pay with their credit card instead of carrying large sums of cash at all times. According to the article below, many credit card companies have recently started to charge annual fees which consequently is causing some people to drop their credit card all together. However, by canceling their credit cards these individuals may see some negative reflections on their credit reports. Canceling a credit card affects the utilization rate on your credit report and ultimately this could cause a 50 to 100 point drop on your credit report. So before cancelling any cards, ensure that the benefits outweigh the consequences.
Theodore Casser has been a loyal Bank of America credit card customer for about 10 years. But the prospect that the bank might start charging him an annual fee because he pays off his balance monthly has the Baltimore software developer ready to sever that relationship.
"I take it almost as an insult," says Casser, who hasn't heard yet if he will be among the small percentage of unprofitable Bank of America customers to be charged a $29 to $99 fee starting next year. "I'm happy to take the hit to my credit rating to cancel the card.
"Many consumers are mad these days at card issuers for imposing fees, boosting interest rates or raising minimum payments and penalties. And like Casser, some customers are upset enough that they threaten to cancel their cards in retaliation. But can getting even backfire by damaging your credit score?