Author Topic: Closing unused credit cards  (Read 2818 times)

ajmers

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Closing unused credit cards
« on: December 20, 2013, 09:08:41 AM »
Last year I opened a Delta Skymiles AMEX card specifically for work expenses so I could keep them separate from personal expenses. The first year was free (no annual fee). I left the job and no longer have regular business expenses.

Is it better to pay $95 a year to keep the account open and keep my total credit limit higher/utilization lower? Or avoid the needless fee since I never need that much credit and I get much better rewards on my primary card?

Frankies Girl

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Re: Closing unused credit cards
« Reply #1 on: December 20, 2013, 09:16:52 AM »
Depends on what your current credit score is, what your credit to debt ratio is, and whether you're planning on applying for anything that will require a credit check within the next 3-6 months.

If all that is good, then I'd close it. I'd close it anyway myself, as I can't stand the idea of paying a fee to use a card.

MissStache

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Re: Closing unused credit cards
« Reply #2 on: December 20, 2013, 09:28:35 AM »
I would close it.  I can't stand the idea of paying a fee for a card, especially a card that I'm not even using!

ajmers

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Re: Closing unused credit cards
« Reply #3 on: December 20, 2013, 10:21:22 AM »
I've never carried a balance on any cards, but I do use my primary card for just about everything to get points. The card I'm thinking of closing has a higher credit limit than my primary one but I'd probably still be well below 35% of my limit even at peak debt (right before I pay off the last month's expenses.)

However, there's a good chance I'll be looking to buy a house next year....would closing the card have a big negative impact on the interest rate I'm able to get?

Guizmo

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Re: Closing unused credit cards
« Reply #4 on: December 20, 2013, 10:42:48 AM »
Yes. Wait until you buy the house then close it. With the Fed starting to taper interest rates will likely go up (though not by much) so it is better to get the lowest interest you can.

desrever

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Re: Closing unused credit cards
« Reply #5 on: December 20, 2013, 11:42:44 AM »
The fee on that card in particular is a pretty bad value compared to its perks, unless you fly delta with checked luggage many times every year. IIRC this card used to have a companion fare perk, which made it worth the cost.

impaire

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Re: Closing unused credit cards
« Reply #6 on: December 20, 2013, 11:58:32 AM »
I had the exact same card as you, and when the renewal came up, I called Amex to cancel it, saying that I refused to pay an annual fee. I couldn't get them to give me the card for free (barely used it, so I'm sure I wasn't a high value customer to them), but I "let them" transfer me to another card without a fee (and upped the credit limit a bit while at it), maintaining my credit utilization ratio while not increasing my bills at the same time.
There's no reason to pay a fee on a credit card just to increase your credit limit, ever.

FIence!

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Re: Closing unused credit cards
« Reply #7 on: December 20, 2013, 12:48:43 PM »
I had the exact same card as you, and when the renewal came up, I called Amex to cancel it, saying that I refused to pay an annual fee. I couldn't get them to give me the card for free (barely used it, so I'm sure I wasn't a high value customer to them), but I "let them" transfer me to another card without a fee (and upped the credit limit a bit while at it), maintaining my credit utilization ratio while not increasing my bills at the same time.
There's no reason to pay a fee on a credit card just to increase your credit limit, ever.

This. Call up AMEX and explain that you would prefer a card with no annual fee, and ask if they can transfer your account to one of their no-fee options.

ajmers

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Re: Closing unused credit cards
« Reply #8 on: December 20, 2013, 12:59:33 PM »
Thanks for the advice. That is a great idea and when I talked to them they did say they could switch me to a no-fee card.