Author Topic: Question about closing a credit card  (Read 3350 times)

EconDiva

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Question about closing a credit card
« on: October 05, 2016, 09:01:27 AM »
I have three credit cards currently:

Capital One Silver ($2k limit) - Balance: $300 (automatic recurring student loan charge I pay off every month)
United Mileage Plus ($8k limit)- Balance: $1200 (will be paid off tomorrow; I charge everything...and I mean everything but rent to this card and pay off monthly)
Chase Sapphire Reserve (Actually do not know the limit yet)- Balance: $450 (that will be the annual fee that comes on the card; it just arrived in the mail today so I will receive it when I get home)

My question is, should I close out the Capital One Silver card?

If so, why?  I can provide the rates if needed.  I was just thinking 2 cards would be enough for me, and the Cap1 only has a $2k limit on it.  Plus I only use it to charge that one Student Loan to; I could move that over to the new Chase Sapphire Reserve card.  I am more concerned about whether or not it would negatively impact my credit?  I haven't closed out a credit card before and I've had the Cap1 for by far the longest amount of time.

FLBiker

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Re: Question about closing a credit card
« Reply #1 on: October 05, 2016, 09:05:09 AM »
I never close cards that don't have annual fees.  There's no upside, and it would reduce your available credit (and thus raise the % of credit utilized) and also reduce your average length of credit.  Both of these affect your credit score.

Personally, though, I'm more of a credit card gamer than you are.  I rotate the card I'm using based on signup bonuses, and I end up closing a bunch of cards because they only waive their annual fee for the first year.  So my situation is different, but I think the advice still applies.

EconDiva

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Re: Question about closing a credit card
« Reply #2 on: October 05, 2016, 09:09:44 AM »
I never close cards that don't have annual fees.  There's no upside, and it would reduce your available credit (and thus raise the % of credit utilized) and also reduce your average length of credit.  Both of these affect your credit score.

Personally, though, I'm more of a credit card gamer than you are.  I rotate the card I'm using based on signup bonuses, and I end up closing a bunch of cards because they only waive their annual fee for the first year.  So my situation is different, but I think the advice still applies.

Well, I was thinking it would be smartest to only use the new Chase card going forward so that would mean no purchases on the Cap1 or United cards. 

Cwadda

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Re: Question about closing a credit card
« Reply #3 on: October 05, 2016, 09:12:26 AM »
If the Capital One Silver card has no annual fees, keep it. Then pump $.01 of gas every month to keep your monthly payments going. Closing the card wouldn't benefit you unless you were paying annual fees, etc.

FLBiker

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Re: Question about closing a credit card
« Reply #4 on: October 05, 2016, 09:12:36 AM »
I never close cards that don't have annual fees.  There's no upside, and it would reduce your available credit (and thus raise the % of credit utilized) and also reduce your average length of credit.  Both of these affect your credit score.

Personally, though, I'm more of a credit card gamer than you are.  I rotate the card I'm using based on signup bonuses, and I end up closing a bunch of cards because they only waive their annual fee for the first year.  So my situation is different, but I think the advice still applies.

Well, I was thinking it would be smartest to only use the new Chase card going forward so that would mean no purchases on the Cap1 or United cards. 

Sure, you could do that.  But assuming there's no annual fees on those other cards, in terms of your credit score, my understanding is that you're better off leaving them open.

redbird

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Re: Question about closing a credit card
« Reply #5 on: October 05, 2016, 09:15:13 AM »
You can use only the Chase card if you want. If the other cards don't have annual fees, then don't close them. Like FLBiker said, it'll negatively affect your credit score. Either put the cards away with your important files and get them out of your purse/wallet so you don't accidentally use them, or cut them up (if you know you will absolutely never use them again) but keep the accounts open.

My DH has a credit card that he hasn't used for many years. The account is still open and they send him a new card whenever the old one expires. But he keeps it open because that was his very first credit card. If he closed that account, the average length of credit would be affected and his credit score would go down.

Cwadda

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Re: Question about closing a credit card
« Reply #6 on: October 05, 2016, 09:21:30 AM »
You can use only the Chase card if you want. If the other cards don't have annual fees, then don't close them. Like FLBiker said, it'll negatively affect your credit score. Either put the cards away with your important files and get them out of your purse/wallet so you don't accidentally use them, or cut them up (if you know you will absolutely never use them again) but keep the accounts open.

My DH has a credit card that he hasn't used for many years. The account is still open and they send him a new card whenever the old one expires. But he keeps it open because that was his very first credit card. If he closed that account, the average length of credit would be affected and his credit score would go down.

Just to add to this, it'll negatively affect your credit score, but it takes 10 years to drop off your report. So it wouldn't affect your credit right away but say 10 years down the road you were looking to buy a house you wouldn't want your first card and a bunch of payments to disappear.

Proud Foot

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Re: Question about closing a credit card
« Reply #7 on: October 05, 2016, 12:40:11 PM »
What was your reasoning for getting the Chase card? Since it has the fee that would be the one I closed and since you just opened it you would still have the benefit of having the capital one opened the longest.  The best for your credit score would be to have one charge each month on two cards and use the third for all your expenses.

EconDiva

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Re: Question about closing a credit card
« Reply #8 on: October 05, 2016, 01:19:24 PM »
What was your reasoning for getting the Chase card? Since it has the fee that would be the one I closed and since you just opened it you would still have the benefit of having the capital one opened the longest.  The best for your credit score would be to have one charge each month on two cards and use the third for all your expenses.

The 100,000 points bonus for travel was why I got that one.  I plan on using it for two trips in 2017; one in May and one in Sep.

HipGnosis

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Re: Question about closing a credit card
« Reply #9 on: October 05, 2016, 01:24:45 PM »
You can use only the Chase card if you want. If the other cards don't have annual fees, then don't close them. Like FLBiker said, it'll negatively affect your credit score. Either put the cards away with your important files and get them out of your purse/wallet so you don't accidentally use them, or cut them up (if you know you will absolutely never use them again) but keep the accounts open.

My DH has a credit card that he hasn't used for many years. The account is still open and they send him a new card whenever the old one expires. But he keeps it open because that was his very first credit card. If he closed that account, the average length of credit would be affected and his credit score would go down.
Some cards will be cancelled by the Co. if you don't use them for a while.  Best practice I've found is to charge something on them annually, like a magazine subscription.

catccc

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Re: Question about closing a credit card
« Reply #10 on: October 05, 2016, 01:29:42 PM »
Keep it open, do a transaction a year or so.

I closed a bunch of cards from years ago and I'm a little sorry I did.  My credit is over 800, so IDK how much it would have affected it, but closing old cards make your average account age lower, and your number of accounts lower (I think) so it's better to keep them.

Cwadda

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Re: Question about closing a credit card
« Reply #11 on: October 05, 2016, 08:18:14 PM »
Keep it open, do a transaction a year or so.

I closed a bunch of cards from years ago and I'm a little sorry I did.  My credit is over 800, so IDK how much it would have affected it, but closing old cards make your average account age lower, and your number of accounts lower (I think) so it's better to keep them.

It depends how old you are. If you don't need a mortgage or car loan 10 years from where you are now...who cares if your credit goes down a bit? As long as you keep moving with your credit cards each month it shouldn't just drop like crazy after 10 years after you close 1-2 of them.