Author Topic: To close, or not to close...that is the (credit card) question.  (Read 5654 times)

atelierk

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Hi all,

Here's a credit card question for y'all. I have recently switched to another credit card for the rewards points and I expect it to become my "mainstay" card. I'll be putting all my routine living expenses on it and paying it off once a month.

My other card (Cap One), the one I've had for years (but only used sporadically), is just sitting there. I understand I shouldn't close the account because it will ding my credit score but every spring (the month varies 'cause I think they're trying to sneak it by me) they charge me a $19 annual fee. The card has no rewards points, and last time I looked it had an okay interest rate but that's a moot point since I don't carry a balance. Edited to add: I've had the card at least 15 years, maybe a little longer. It's my oldest card.

The stupid $19 fee drives me nuts because it's easy to overlook if I haven't made any charges that month. Last year they won this game of "gotcha", I forgot all about the fee, missed the payment and owed them some interest. Grrrrrr.... This year I remembered to check it and sure enough, there's the fee, due on May 25.

So, all you badass Mustachians...what's the smartest move to make with this Cap One card? Go ahead and kill it anyway? How much will it ding my score (the Cap One credit limit is about twice that of the new card).
« Last Edit: May 07, 2012, 12:19:46 PM by atelierk »

gecko10x

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Re: To close, or not to close...that is the (credit card) question.
« Reply #1 on: May 07, 2012, 11:56:25 AM »
Close it.
I'm new to the whole MMM thing, but that's a waste of $19. And any damage to your credit should be reversed in a few months I would think.

grantmeaname

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Re: To close, or not to close...that is the (credit card) question.
« Reply #2 on: May 07, 2012, 12:01:59 PM »
The biggest way it would impact your score would be through your credit history, right? If it's not your oldest card, I would think that the impact from that would be minimal.

If you don't utilize your new card very fully (30-50% a month), then your utilization would still be relatively low even without the old card open and so I don't think you'd suffer much there.

atelierk

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Re: To close, or not to close...that is the (credit card) question.
« Reply #3 on: May 07, 2012, 12:23:35 PM »
I probably won't utilize the new card more than 15% of the credit line. I hadn't thought of that. Still, I think they look at your overall total available credit and subtracting the Cap One card will increase the percentage in use at any given time. I think. :-) Then again, I don't really have any plans to borrow money (I'm not into flipping real estate or anything like that) so maybe it doesn't matter.

I think we've all been well trained to protect our "score" like it's a competition or something.

Sauce

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Re: To close, or not to close...that is the (credit card) question.
« Reply #4 on: May 07, 2012, 12:26:09 PM »
No points???

i've saved literally hundreds of dollars on airfare using CapOne
also, i've redeemed gift cards for the girl and for me using Discover.

there might be better rewards cards for your personal preference, but it can add up to thousands of dollars of free money over time!  (i never carry a balance)

atelierk

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Re: To close, or not to close...that is the (credit card) question.
« Reply #5 on: May 07, 2012, 12:28:32 PM »
No points???

i've saved literally hundreds of dollars on airfare using CapOne
also, i've redeemed gift cards for the girl and for me using Discover.

there might be better rewards cards for your personal preference, but it can add up to thousands of dollars of free money over time!  (i never carry a balance)

The new card has points which is why I plan to start putting most of my expenses on it.

I looked through the Cap One cards to see if there was one that might be useful that I could try and convert the Cap One to, but either the rewards were piddly or not of much use to me like airfare. I haven't need to fly anywhere in years.

grantmeaname

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Re: To close, or not to close...that is the (credit card) question.
« Reply #6 on: May 07, 2012, 12:34:26 PM »
I probably won't utilize the new card more than 15% of the credit line. I hadn't thought of that. Still, I think they look at your overall total available credit and subtracting the Cap One card will increase the percentage in use at any given time. I think. :-)
That's exactly right; decreasing the total available credit will make the amount you're using become a larger percentage. But as you say, you'd be increasing it to 15% from 10%, which means you still won't be using so much of your available credit that you look like a lending risk. If you went from using 60% to 90%, that would be a problem.

arebelspy

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Re: To close, or not to close...that is the (credit card) question.
« Reply #7 on: May 07, 2012, 12:42:44 PM »
Cancel.

Not worth a fee for the credit history boost unless you're planning on borrowing money very soon.  Open a new one and let it sit in a drawer.  Time will help.
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James

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Re: To close, or not to close...that is the (credit card) question.
« Reply #8 on: May 07, 2012, 12:51:10 PM »
I don't know how much longevity is used in score calculation, but going from having a card for 15 years to cancelling that card and having a brand new one seems like a pretty big change.

If you don't care about your score then I'd cancel it, no problem there.  But if you want to protect your score I'd call up Cap one and try and switch to anything without a fee.  But at the end of the day, I wouldn't keep the card with the fee just to protect my score.

arebelspy

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Re: To close, or not to close...that is the (credit card) question.
« Reply #9 on: May 07, 2012, 12:52:18 PM »
If you don't care about your score then I'd cancel it, no problem there.  But if you want to protect your score I'd call up Cap one and try and switch to anything without a fee.  But at the end of the day, I wouldn't keep the card with the fee just to protect my score.

That's a neat idea, if you can switch it to a no fee card and retain the credit history. They may be willing to do that to keep you as a customer.
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Bakari

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Re: To close, or not to close...that is the (credit card) question.
« Reply #10 on: May 07, 2012, 12:59:31 PM »
Call capital one, and tell them you will close the account if they don't drop the fee.

There's a good chance they will.

Whether it will help or hurt credit score depends partially on how the age of the account compares to the average age of your accounts.
Sign up with creditkarma.com (free) and they will tell you the average age of your accounts, and then get a free credit report from https://www.annualcreditreport.com (that's the official government sponsored site, don't use any other or you'll end up with a membership of some sort) to find the age of any particular account.

James

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Re: To close, or not to close...that is the (credit card) question.
« Reply #11 on: May 07, 2012, 01:18:50 PM »
If you don't care about your score then I'd cancel it, no problem there.  But if you want to protect your score I'd call up Cap one and try and switch to anything without a fee.  But at the end of the day, I wouldn't keep the card with the fee just to protect my score.

That's a neat idea, if you can switch it to a no fee card and retain the credit history. They may be willing to do that to keep you as a customer.

I just did a bit of searching and couldn't find any information on the web about this.  It must be out there somewhere, but I couldn't find it.  I know with my Discover card I can change to different programs within Discover while keeping the same account, not sure if that works with places like Capital One.

But I did find a few articles in my search that suggested the dip from closing your oldest CC account is not a huge one, especially if you aren't doing a balance transfer that increases the used percentage of your credit limit.

So I agree with Bakari, call capital one and close the account if they don't drop the fee or switch it to a program without fees.

MrSaturday

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Re: To close, or not to close...that is the (credit card) question.
« Reply #12 on: May 07, 2012, 06:05:27 PM »
They dropped the fee when I threatened to quit.  I keep mine around for the free foreign transactions.

saahee

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Re: To close, or not to close...that is the (credit card) question.
« Reply #13 on: May 08, 2012, 02:03:07 AM »
I think that the problem with owning a credit card boils down to how you are able to control on your own.  I mean, it would not matter how much credit limit you have as long as you know how to budget it.

Though I have to admit, it really is easy to spend money that you do not see as you do not really feel that you lose them until the time you have to pay the bank for it. So it is all about control if you ask me.

 

Wow, a phone plan for fifteen bucks!