Should You Tear Up Credit Cards?

You should tear up credit cards only if you are planning to close the accounts as part of a debt elimination strategy or a plan to improve credit scores. Simply tearing up credit cards accomplishes very little. The accounts remain open, your credit score is unaffected and charges are still possible if you use the account number, expiration date and three- or four-digit code on the back of the card to make purchases by telephone, mail or online.

Impulse Spending

Tearing credit cards up could reduce impulse spending, but people who are determined to spend can easily order new cards if the accounts are still open. Locking cards away in a safe deposit box -- rather than tearing them up -- also reduces impulse spending while keeping the cards available for true emergencies.

Debt Elimination

Many people who tear up credit cards are making a commitment to paying down debt. They cancel their accounts and then rip up the cards. No further charges are possible once the accounts are canceled and the cards torn up. At that point, the consumer's intent is to pay the cards off as quickly as possible to avoid further finance charges on balances.

Credit Scores

Tearing up credit cards, cancelling the account and paying off the balance can affect your credit scores. Credit scores are three-digit numbers ranging from 350 to 850, with scores of 720 or higher considered excellent. Excessive credit card debt hurts credit scores, and some people with multiple credit card accounts choose to tear up several accounts while keeping only a few open. Experian, one of the major credit bureaus, reports that some people are turned down for credit because they have too many credit accounts open. Some people in that that situation may choose to tear up cards, but they must also pay down their debt to improve their credit.

Considerations

It is impossible for anyone to say precisely how a person's credit scores will change once that person's credit cards are torn up, accounts canceled and balances paid off. That's because everyone's credit situation is different. Someone with relatively high credit scores may see little improvement because their scores are already high, while someone with poor credit may realize a significant credit score increase. People who do tear up cards and cancel accounts should pay off the cards with the highest interest rates first. That won't help with improving credit scores, but will lead to more savings on finance charges.