Can I still use my credit card after debt consolidation?

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While you can still use your open credit card accounts after debt consolidation, consumers should do so with caution. If you do use your credit card after debt consolidation, be sure to pay off your balance regularly. Accumulating too much credit card debt may defeat the purpose of consolidating debt in the first place. According to USA Today, the average American household carries about $7,951 in credit card debt in a year.1

Paying off your credit card, whether it’s with a debt consolidation loan or not, does not actually cancel the card. While it does bring your balance down to zero, the card will still be open and active. If you want to cancel your card you would need to alert the credit card company. But leaving it open could have some financial benefits. 

For many people in America, credit card debt is an everyday issue. It makes sense, as credit cards are easy to use, and provide customers with money that they may not actually have in their bank account. It’s very appealing to be able to purchase whatever you want at a moment’s notice. But it often leads to unmanageable amounts of debt that can affect your finances for years to come. 

Debt Consolidation Loans for Credit Card Debt

Many borrowers who find themselves in a large amount of credit card debt with several different cards turn to debt consolidation loans. A debt consolidation loan is any large personal loan that a borrower uses to pay off several other smaller debts. This allows the borrower to focus on one monthly payment instead of several from a number of different cards and accounts. In other words, it simplifies your finances and makes budgeting and planning easier. 

But should you cancel your credit cards if you consolidate debt? Some would say no. By leaving your credit cards open, with a zero balance, it shows the credit bureaus that you have access to credit but are not using it. This could potentially help your credit score. This is referred to as your credit utilization ratio. It’s the measure of how much credit is available to you versus how much you’re using. Keeping a low credit utilization ratio shows the credit bureaus and lenders that you’re financially responsible. 

However, if leaving these cards open will lead you to use them again, then it may not be worth the risk. We’d recommend leaving them open and then cutting up the cards so you don’t have access to them anymore, and won’t be tempted to use them again. Regardless, make sure you’re aware of your utilization ratio, and try to keep it low.

Managing Multiple Debts 

In the context of managing multiple debts, it’s essential to understand the impact of the debt consolidation process on your credit report. For homeowners, a home equity loan might be an attractive option due to potentially lower interest rates compared to other forms of credit. Credit unions often offer favorable terms for such loans, making them a viable choice for consolidating multiple credit card balances. 

Additionally, a balance transfer credit card can be a strategic tool for managing debt, allowing you to transfer and consolidate debts from various credit card accounts into one with a potentially lower interest rate. However, it’s crucial to approach this method with caution, as it requires discipline to manage the new credit line effectively and avoid further debt accumulation. Whichever method you choose, regularly monitoring your credit report is vital to understand how these financial decisions impact your credit health.

Check out the CreditNinja dojo for more free resources and information about credit cards, debt consolidation, and more! 


  1. What is the average credit card debt? | USA Today

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