2 Reasons NOT To Cut Up Your Credit Cards 1. If the card still has a balance on it and you cancel the card, the credit bureaus won’t find anything on your report for “available credit” and the “credit limit.” That’s good, right? Wrong. Since you still have a balance on the card and no credit limit is listed (since you closed the account), it actually looks like you maxed it out. And that can—and likely will—wreak havoc on your credit score. 2. If you have paid off your balance, but cut up your card anyway, you’re missing out on a valuable, steady payment history. Remember, you’re going to need that credit down the road to take out a loan, buy a house or negotiate better deals on existing payments. Cutting your card is essentially taking you out of the game before you have a chance to play. And even if you do have a good reason to close a card (it charges exorbitant annual fees or stops offering the perks that made you sign on in the first place), cutting it up isn’t all you have to do: You can keep the card alive by leaving one recurring payment on it, like a utility bill, and using auto pay. That way, you don’t have to think much about it, and it’s still active. In the meantime, to help get your debt under control, start switching a majority of your daily spending to a debit card--that way you are spending money that’s actually in your bank account. Studies show that people using credit cards spend 12% to 18% more when using credit rather than debit cards.