Author Topic: Canceling a credit card without affecting credit score  (Read 5435 times)

sloof70

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Canceling a credit card without affecting credit score
« on: August 02, 2013, 11:10:17 AM »
I have a credit card that I never use and it is the only one that charges me an annual fee.  This fee was $45 last year, charged on 8/24.  Obviously I don't want to keep paying that fee.  However, this card makes up about 40% of my overall credit limit between three cards, and the two other cards I have were acquired this year.  I have a good credit score at around 760-770, I'm beginning the home-buying phase of my life, and I don't want to screw my credit score by getting rid of one card I never use that charges me a fee.  Any advice?

EDIT: I was reading on the forum someone that was in a similar position (with Alaska Airlines card) that mentioned trying to switch cards to a new no-fee card while keeping the history.  Anyone have any luck with this? 
« Last Edit: August 02, 2013, 11:18:08 AM by sloof70 »

Left

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Re: Canceling a credit card without affecting credit score
« Reply #1 on: August 02, 2013, 11:25:59 AM »
What I did with my AMEX card was call them up and tell them I want to cancel the card but keep the account open. Because the account is open (I don't see what good it does except I can sign up for another card in the future easier) I didn't take any hit on the credit score.

I'm not 100% sure this works this way now, I did this back in around 2008 or 2009

RewardTraveler

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Re: Canceling a credit card without affecting credit score
« Reply #2 on: August 02, 2013, 12:04:04 PM »
Start by calling the CC company and asking for options.  Some allow you to downgrade to a no fee card, some do not, but the best way to find out is to just ask.

If you can't get rid of the annual fee, come back and we can suggest other alternatives.

MoneyLifeandMore

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Re: Canceling a credit card without affecting credit score
« Reply #3 on: August 03, 2013, 09:18:50 AM »
The first thing I'd do is call and ask them to waive the fee. If they say no, try calling back later and asking again. If that fails, you can ask if there is a no fee version you can switch to.

If this card is one of your newer cards and doesn't have a high % of your credit limit, it may not hurt you too much to close it. It also wouldn't hurt if you consistently keep your percentage of credit used very low on a month to month basis.

sloof70

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Re: Canceling a credit card without affecting credit score
« Reply #4 on: August 03, 2013, 09:58:32 AM »
I called Bank of America and they were able to switch this credit card to a different no fee card. They said it will retain all of my credit history which is good. So I guess the old switcheroo method works.

MoneyLifeandMore

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Re: Canceling a credit card without affecting credit score
« Reply #5 on: August 03, 2013, 10:02:25 AM »
Great! I'm glad you found an option that works for you :) I recently did the same thing downgrading my Chase Sapphire Preferred to a Chase Sapphire card after I got hit with the first annual fee.

MoneyCat

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Re: Canceling a credit card without affecting credit score
« Reply #6 on: August 03, 2013, 10:05:54 AM »
     If you find that you do want to cancel a credit card sometime in the future, just make sure your overall utilization isn't affected and it's no sweat.  Closed credit cards still continue to age and count towards your average age of account for the next ten years following closing of the account.

hybrid

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Re: Canceling a credit card without affecting credit score
« Reply #7 on: August 03, 2013, 02:01:17 PM »
Your credit rating seems fine to me, I wouldn't sweat this too much unless there are other reasons why you feel like you may not be creditworthy.  Why do you have three credit cards in the first place?  I use just one (Costco AMEX) throughout the month, and pay the balance in full to collect the benefits at the end of the year.

sloof70

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Re: Canceling a credit card without affecting credit score
« Reply #8 on: August 03, 2013, 02:44:10 PM »
Your credit rating seems fine to me, I wouldn't sweat this too much unless there are other reasons why you feel like you may not be creditworthy.  Why do you have three credit cards in the first place?  I use just one (Costco AMEX) throughout the month, and pay the balance in full to collect the benefits at the end of the year.
I have three credit cards for a couple reasons.  Primarily, because they all have different rewards programs, and I want to maximize those at the various establishments.  The other reasons is to boost my credit score with a higher combined credit limit.

Mr.Macinstache

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Re: Canceling a credit card without affecting credit score
« Reply #9 on: August 05, 2013, 03:22:11 PM »
Three credit cards might be hurting you. I only have two. One is an 8k limit. Nothing on it, no fee's. The other has about 1,000 on it and I'm paying it off. My CS is over 800.

I would get one without a fee, if they can't do that, close it. Don't replace it unless you need it. Your credit should be fine.

captainawesome

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Re: Canceling a credit card without affecting credit score
« Reply #10 on: August 06, 2013, 09:15:26 AM »
This may aid in some of the misinformation regarding cancelling/closing credit cards. http://www.mymoneyblog.com/how-opening-and-closing-credit-card-accounts-affects-your-credit-score.html

with that said, you can get overwhelmed quickly if you don't pay attention. But based on this, and the large number of rewards cards out there, I don't see any issue getting some free money and/or benefits from better cards.  If they charge me a fee, I simply wait until they are going to charge me and cancel.  I don't see the real need for a credit score (although mine is 820) beyond major purchases like a mortgage (which I already have)

MoneyCat

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Re: Canceling a credit card without affecting credit score
« Reply #11 on: August 07, 2013, 08:39:33 AM »
I don't see the real need for a credit score (although mine is 820) beyond major purchases like a mortgage (which I already have)

When people are starting out in independent life, a good credit score is important to be able to get a job or a good apartment (both usually check your credit these days).  However, once you have a job and have bought a house, credit loses importance.  While I was rebuilding my credit after some rough times, I monitored my FICO scores on a monthly basis.  Now, I have everything I need and I am moving more toward the Mustachian lifestyle, so my credit score isn't a top priority anymore.

Rural

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Re: Canceling a credit card without affecting credit score
« Reply #12 on: August 07, 2013, 11:05:12 AM »
I don't see the real need for a credit score (although mine is 820) beyond major purchases like a mortgage (which I already have)

When people are starting out in independent life, a good credit score is important to be able to get a job or a good apartment (both usually check your credit these days).  However, once you have a job and have bought a house, credit loses importance.  While I was rebuilding my credit after some rough times, I monitored my FICO scores on a monthly basis.  Now, I have everything I need and I am moving more toward the Mustachian lifestyle, so my credit score isn't a top priority anymore.

You know, unless we become unhappy with our car insurance (seems unlikely) or our nearest neighbor decides to sell his family farm (wildly unlikely), I can't think of a reason either of us will ever need to think about our credit scores again. That's a little weird, but very liberating.