canceling credit cards

[Bad_With_Money]

Hi all,

While I have kind of dropped the ball on kicking the Mustache lifestyle into full gear, this site has, at the very least, caused me to really look at various fees and CC statements more closely.

To that end, I want to ask: when is it right to cancel a credit card?

Background:
I have 4 cards right now:
Best Buy, which I never use;
PNC Premier Traveler card, which I used to avoid foreign transaction fees, but carries an $85 annual fee;
American Express Blue card, has good rewards but a $95 annual fee;
and most recently, Aviator Advantage Barclays Master card, $95 annual fee.

In terms of debts/credit risks, I owe a ton on student loans, but beyond that pay my car payment and full CC balance each month. 

I got the Best Buy card a while back for some financing on a television; I have never used it since.  The Traveler card I don't use much either.  The Amex was my main card, but recently I signed up for the Mastercard because it came with a free flight, and I can get double points by using it when I book trips for work.

The unused cards - should I cancel them?  What prompted this was that I logged in to pay the Traveler card and saw the $85 fee.  I called support and they can close the card which would make me avoid needing to pay that.  But, will it damage my credit?  I feel like I could cancel the Amex and Traveler cards and save $180 in fees since I do not use them too often. 

Thanks for any advice.  Not sure if this is the right subforum to post this in!

[nancyjnelson]

Unless you are good at credit card churning for the points/rewards, close a couple of them. I would never get an American Express card since many retailers don't accept it.  But that's just me.

I have two cards - one I use all the time, and the other one I keep as back-up in case my first card is compromised.  Neither has an annual fee (both are Visa - one with my credit union, the second with USAA).   

Neither of my institutions (my credit union or USAA) have foreign transaction fees.  That said, Visa itself still levies a 1% foreign transaction fee.

I get around this by using Apple Pay; there are no foreign transaction fees when I pay with my credit card using my mobile phone - others will need to chime in if other mobile payment systems do assess fees.  Mobile payments are much more common overseas than in the U.S. - at least in Europe and Asia.  An added benefit is that it's more secure than carrying around my credit card; if my phone is stolen, the thief would still need my thumbprint each time he wanted to use the credit card.

[TomTX]

Rather than cancel, I would call up and ask to downgrade to a no-fee card. Having long-aged cards/accounts is very helpful for your credit score. Downgrading doesn't reset the age on the account.

[Catbert]

I'm a moderate churner so YMMV.

I would cancel the Best Buy card.  At worst it's a temptation.  At best a nothing.

I would probably keep your oldest card if it is significantly older than others.

Double check your Barclaycard.  I'm pretty sure it has zero FTFs.  If so, consider canceling or downgrading your PNC Travel Card.  If you travel of AA it might be worth keeping for the long run.  If not, downgrade to the no-fee card and keep in your sock drawer.

General tip:  Once a annual fee posts call and threaten to cancel ("I'm considering canceling...but want to know if there are any incentives to stay...").  You may be given a bonus to stay.  That could be spend $200 and get $100 statement credit (rare).  Or more likely something like spend $2000 in 3 months and get 10,000 points. 

[TyGuy]

General tip:  Once a annual fee posts call and threaten to cancel ("I'm considering canceling...but want to know if there are any incentives to stay...").  You may be given a bonus to stay.  That could be spend $200 and get $100 statement credit (rare).  Or more likely something like spend $2000 in 3 months and get 10,000 points.

I've never thought of threatening to leave a CC company, thanks for the tip, I'll be sure to use this in the future!

[Much Fishing to Do]

I'm probably on the very simple end of using CCs, not trying to churn, etc, so this is an answer from someone with that viewpoint for many years:

1) If you're not happy with your savings rate then I'd say don't have one as they may have a part in that, or if you don't have a lot of savings I'd say don't have one because it may be allowing you to spend more than you can afford (but once you're to point you can do more damage with a checkbook than with a credit card not having a credit card doesn't really provide any of that safety anymore).  Just use your bank card.

2) Other wise CCs are only causing you a problem if fees are involved (so dont get any with annual fees, and only get ones you can set up for automatic balance payment so you never miss a payment) or if playing with them effects your credit score and that matters for some reason (getting a mortgage soon, etc).  Their advantages can be many, for me I just like all the fraud protection, anywhere from me not having to pay off a completely bogus charge to me using their features to decline to pay for things you feel you get ripped off on.  And I get the most basic cash back card which is nice money to see (I run big things like my medical insurance premiums thru that card which returns a nice savings alone.)

3) So I generally had one card, but then one time when was on a trip and it was getting declined b/c of all the protections they have on them I decided it would be nice to have a second card.  I also made a purchase one time where signing up for a store card got me something like a $300 savings, so I signed up for it, got the savings and then whenever it let me (like 6 months later) cancelled it, never used it other than that.  Again the only downside I can think of was maybe my credit score went down a new signup and then canceling but I don't really care about that.  Most of those credit card scoring tings like credit karma have a feature where you can simulate things like cacneling a credit card to see what approxiamtely it would do to your score so if that matters I would try that.

[AlexMar]

There is absolutely no reason for you to have cards with annual fees.  Cancel all the ones that do.  Then grab a decent card that has no annual fees.  I like the Citi Double Cash card where you get 2% on everything.  It's straight forward and simple.  Do you really spend that much outside of the country to worry about the fees?

[geekette]

The one card I reluctantly pay an annual fee for is the Amex Blue Cash Preferred.  If you have the same one I do, it gives 6% back on groceries, and since I buy my prescriptions at the grocery store, I get 6% back on that as well.  It also gives 3% back on gas.

You can downgrade to an Amex Blue Cash Everyday, which has no annual fee, but gives 3% back on groceries.  The numbers didn't work out for us to downgrade.

Keep your oldest fee free card forever.  Downgrade rather than close.

[Dave1442397]

There are plenty of no-fee cards that don't charge foreign transaction fees, such as the Bank of America Travel Rewards card.

[TomTX]

There is absolutely no reason for you to have cards with annual fees.  Cancel all the ones that do.  Then grab a decent card that has no annual fees.  I like the Citi Double Cash card where you get 2% on everything.  It's straight forward and simple.  Do you really spend that much outside of the country to worry about the fees?

Why cancel and re-apply to a different card from the same bank with no signup bonus?

Just call Citi and have them convert the (Citi) Best Buy card to a (Citi) Double Cash. Usually they will take care of it for you.

[Milizard]

I would only keep a card with an annual fee, if I were making out like a bandit over and above the fee. If that were the case for multiple fee cards, you're probably spending too much money on them.

[AlexMar]

The one card I reluctantly pay an annual fee for is the Amex Blue Cash Preferred.  If you have the same one I do, it gives 6% back on groceries, and since I buy my prescriptions at the grocery store, I get 6% back on that as well.  It also gives 3% back on gas.

You can downgrade to an Amex Blue Cash Everyday, which has no annual fee, but gives 3% back on groceries.  The numbers didn't work out for us to downgrade.

Keep your oldest fee free card forever.  Downgrade rather than close.

Not bad.  I think a typical family can make this a profitable card as you only need $400 - $500 in grocery spending alone to earn a couple hundred bucks a year.  The key is to only use it for groceries and gas and nothing else.

[frugalnacho]

The one card I reluctantly pay an annual fee for is the Amex Blue Cash Preferred.  If you have the same one I do, it gives 6% back on groceries, and since I buy my prescriptions at the grocery store, I get 6% back on that as well.  It also gives 3% back on gas.

You can downgrade to an Amex Blue Cash Everyday, which has no annual fee, but gives 3% back on groceries.  The numbers didn't work out for us to downgrade.

Keep your oldest fee free card forever.  Downgrade rather than close.

Not bad.  I think a typical family can make this a profitable card as you only need $400 - $500 in grocery spending alone to earn a couple hundred bucks a year.  The key is to only use it for groceries and gas and nothing else.

I also have the amex with a $95 AF but get 6% back on groceries.  If you spend $3,166.67 on groceries in a year the 6% will net you $190 in rewards, which is enough to pay for the $95 AF and still give you $95 cash back (which is was you'd make with the 3% card and no AF).  Anything above that is 6% gravy.  We spend more than that on groceries annually so the card pays for itself for us.  We only use this card to pay for groceries, nothing else.  We have a costco visa card which gives 4% back on gas.  We usually buy gas at the kroger gas station though as it is cheaper than any other gas stations, especially with the kroger rewards discount.  Unfortunately the kroger gas station is not coded as a grocery store or a gas station, it's just coded as "other" for all CC we have.

[AlexMar]

The one card I reluctantly pay an annual fee for is the Amex Blue Cash Preferred.  If you have the same one I do, it gives 6% back on groceries, and since I buy my prescriptions at the grocery store, I get 6% back on that as well.  It also gives 3% back on gas.

You can downgrade to an Amex Blue Cash Everyday, which has no annual fee, but gives 3% back on groceries.  The numbers didn't work out for us to downgrade.

Keep your oldest fee free card forever.  Downgrade rather than close.

Not bad.  I think a typical family can make this a profitable card as you only need $400 - $500 in grocery spending alone to earn a couple hundred bucks a year.  The key is to only use it for groceries and gas and nothing else.

I also have the amex with a $95 AF but get 6% back on groceries.  If you spend $3,166.67 on groceries in a year the 6% will net you $190 in rewards, which is enough to pay for the $95 AF and still give you $95 cash back (which is was you'd make with the 3% card and no AF).  Anything above that is 6% gravy.  We spend more than that on groceries annually so the card pays for itself for us.  We only use this card to pay for groceries, nothing else.  We have a costco visa card which gives 4% back on gas.  We usually buy gas at the kroger gas station though as it is cheaper than any other gas stations, especially with the kroger rewards discount.  Unfortunately the kroger gas station is not coded as a grocery store or a gas station, it's just coded as "other" for all CC we have.

When I do the numbers, I compare to a 2% card, as that's what you can get on a card with no annual fee.  I'd want to make more than $30 to justify dealing with an extra card.  But if you are spending $500/mo or so on groceries, I can totally see it worth getting a 6% grocery card.  Just note that it will save you $20/mo on your grocery bills compared to a 2% card.

HOWEVER.  If you are spending more than $500/mo, you need to track as the AMEX maxes out at $6k/year ($500/mo) then reverts to 1%.  So make sure once you hit the $6k, you are switching cards.