Many American Express customers have reported receiving a card in the mail, offering them $300 if they will pay off the full balance on their American Express card and close their account. So far, it seems that the offer is only good for those American Express customers who receive the notice in the mail: it includes an RSVP code. The terms of the offer, according to CreditMattersBlog, are pretty precise. If you agree to take the deal, you must pay off your entire balance by April 30 — if it isn’t, you don’t get the $300 and your account is still closed.
If you have received the American Express offer, you may be considering taking it. After all, $300 can come in handy — and if you’re in a position to pay your balance, it generally makes sense to do so. But there are some pros and cons to closing a credit card account. One of the biggest issues is what it might do to your credit score. In most cases, closing an account can put a ding in your credit score. As long as you aren’t planning on needing a lot of new credit (taking out a mortgage, getting a loan for a new car or opening a new credit card account), a small drop in your credit score may not be as important of a drawback as it might have been in years past.
While it’s not an ideal situation, many people rely on their credit cards to cover expenses in emergencies. Closing a credit card account will make a line of credit unavailable, which could put someone in a pinch if he or she runs into trouble. Many people compromise on the situation: they pay off the balance, but keep the account open just in case. But, of course, going that way won’t earn a $300 incentive.
Paying off a credit card account can be beneficial in the long run. You’ll pay less in interest — and if you add in the $300 incentive, you’ll be coming out ahead. It’s also worth not having to worry about managing the balance of the card, as well as all the problems that go along with having a credit card (like giving identity thieves more opportunities).
The decision on whether to pay down the balance on a credit card and close the account isn’t limited to American Express customers, of course. With the variety of changes that companies are making to credit card terms — dropping credit limits, raising interest rates and so on — many customers are no longer comfortable with their credit card companies. If you read the fine print of paperwork that comes with any announcement of a change in the terms of a card, you’ll notice that credit card companies make a point of telling you that if you don’t like the changes, you’re welcome to close your account. If it won’t cause you any problems, it’s worth taking them up on their offer.
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