Author Topic: Close out newly opened credit card?  (Read 1072 times)

Giants99

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Close out newly opened credit card?
« on: February 05, 2018, 12:41:57 PM »
I opened a new credit card to make a $2500 purchase and have since paid it off. 

I have 3 personal credit cards that I like and keep for rewards purposes.  Oldest being an AMEX, which is 2 years 8 months old.  Other two are less then two years old, and one is only 8 months old.  Otherwise I have my mortgage (3 years 5 months) and my car loan (2 years 3 months).  The new account in question is only two months old.

My average credit age is 1 year 10 months and is the only category I have bad marks in.  Credit score is over 700 (773 on credit karma). 

My mortgage is on a 1 bedroom condo and I am going to sell and buy a house in approximately 2 years.  So I have a big need for best possible credit. 

Would I best off closing out this new account/CC or just letting it be?  I am not likely to purchase anything from the store in question again.  I previously hurt my score by closing out old credit cards I opened in college and donít want to make a similar mistake.  But since this is a new account, not sure if itís ok to get it closed or if that will help me. 

Thanks

Lady SA

  • Bristles
  • ***
  • Posts: 459
  • Age: 27
  • Location: Midwest
Re: Close out newly opened credit card?
« Reply #1 on: February 05, 2018, 02:54:43 PM »
I wouldn't close the card/credit line. Just downgrade it to a annual-fee-free credit line (if there is currently a yearly fee; if not, leave it). Then leave the credit line alone. Having more available credit (which boosts your credit utilization rate, which has a major positive impact) will help your credit score, which is important if you are planning on purchasing a house in 2 years.

My DH and I open cards frequently (we travel hack) and always try to keep the cards after we use the bonus points but no longer want to actively use the card. We downcrade the line to a fee-free line, then put the card in a drawer and forget about it. Keeping our normal amount of spending but having increasing credit available in our names means our credit utilization is super, SUPER low. ie, only have <$500 on the cards at any one time while having a total of at least $60k available to us.

Thats also why we update our incomes and sometimes request credit limit increases even on cards we don't actively use. It's purely to increase the credit available to us even if we have zero intention of ever using that much credit or even touching that particular card again.

Giants99

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Re: Close out newly opened credit card?
« Reply #2 on: February 06, 2018, 06:24:15 AM »
I do pay off my CCs in full every month and typically am under $1000. 

Combined credit line is over 30k

coldestcat

  • 5 O'Clock Shadow
  • *
  • Posts: 60
Re: Close out newly opened credit card?
« Reply #3 on: February 06, 2018, 10:16:53 AM »
If your only credit issue is credit age, and there is no fee you might as well keep the card.

Rubic

  • Handlebar Stache
  • *****
  • Posts: 1072
Re: Close out newly opened credit card?
« Reply #4 on: February 07, 2018, 09:38:56 AM »
Assuming it's a card with no annual fee, keep it and put a small purchase
on it once a year.  In the CC churning world, we call this "sock drawering"
your credit card.  It gradually increases your age of credit and since it increases
the total amount of credit available to you, it lowers your overall credit utilization.

If there is an annual fee, consider doing a product change (downgrade)
to a no-AF card if one is available.

acroy

  • Handlebar Stache
  • *****
  • Posts: 1702
  • Age: 42
  • Location: Dallas TX
    • SWAMI
Re: Close out newly opened credit card?
« Reply #5 on: February 07, 2018, 09:44:20 AM »
Close it, don't worry about it, impact will be minimal and will not affect the mortgage rate you get. Good luck!

HipGnosis

  • Handlebar Stache
  • *****
  • Posts: 1593
Re: Close out newly opened credit card?
« Reply #6 on: February 07, 2018, 10:24:28 AM »
Assuming it's a card with no annual fee, keep it and put a small purchase
on it once a year.  In the CC churning world, we call this "sock drawering"
your credit card.  It gradually increases your age of credit and since it increases
the total amount of credit available to you, it lowers your overall credit utilization.

If there is an annual fee, consider doing a product change (downgrade)
to a no-AF card if one is available.
+1
The more cards you have, the better your odds of getting a 'teaser' offer.   I paid for the new roof on my house with a 0% for 15 months 'convenience' check.   I now have an offer from another card and will transfer the balance to that.
Sometimes it really helps to have multiple cards.  You usually can't use an offer to transfer a balance of another card of the same Co (like CITI).  But you can (and I have) transfer a balance to a card like Chase and then use the CITI offer to transfer the balance.

letired

  • Pencil Stache
  • ****
  • Posts: 823
  • Location: Texas
    • Needs More Glitter
Re: Close out newly opened credit card?
« Reply #7 on: February 07, 2018, 10:31:12 AM »
My understanding is that if you close a new card, it stays on your credit report as a very 'young' card since credit things stay on your credit report even after they are closed. If you leave it open, it gradually gets older and helps increase the average age of your credit lines. So you should leave it open!