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"Borrowers encouraged to close old credit card accounts"

By admin | September 17th, 2009 | Credit Cards

Industry officials are encouraging consumers to close any old credit card accounts that they have if they no longer tend to use the cards that are tied to those accounts.

Many people tend to stop using certain credit cards once they have cleared the balance, but whilst they may dispose of the actual card by cutting it up many fail to contact the cardholder to actually cancel the account, which continues running in the normal way.

Recent research has shown that there are currently around 38 million credit cards in the UK that are not being used, amounting to around £200 billion in unused available credit. The research showed that the average consumers has more than two credit cards that they are no longer using, and around one in every fourteen consumers is thought to have four to five credit cards that they no longer use.

Officials have said that there are a number of dangers with having unused credit cards and not closing the account. First of all it could make it difficult to get finance in the future, as lenders will look at the amount of available credit consumers have and how it is used. It may also result in the credit limits on the cards that are used being reduced, as banks will see the fact that the consumer does have access to a lot of credit, even if it is not being used, as a higher risk.

Consumers may also find that some card companies make annual charges for credit card accounts that are left lying dormant. Have a dormant credit card account can also increase the risk of becoming a victim of fraud, as many consumers will not get access to statements if the card is not being used, and will therefore be less likely to pick up on any suspicious activity.

Tags: close credit card accounts

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