? About what to do with credit cards that are paid in full

[chabs]

I have a few minor credit cards that have been paid in full for a while (such as HSN and small clothing stores). I really don't use them because I try to keep all of my purchases on my Disney Visa so that I can get the points. Should I just leave them open or send a letter asking for the account to be closed? I wasn't sure what to do as far as it having an effect on my credit.

 

[babyrich]

I would close the account if you dont use them. I dont see that it would do anything to your credit. They were closed by you, not bankruptcy and have no balance.

 

[tfoley427]

I had a similar question like this a few months back. I talked to several finance people as well as my mortgage broker and they had the same opinion. If they are a "store" card, such as Best Buy, Kohls, Sears get rid of them. The interest rates on them are usually way to high, and they don't offer as much when it comes to your credit score, and infact can count negatively against it. If you have cards that are major such as Visa, Mastercard, AMEX etc, keep them. Say you have a Best Buy Visa card and you can make purchases anywhere and you gain points (like our Disney Cards) keep it.

 

[elcodfish]

If it is for a small card that you can only use at the store (like a Sears card) cancel it, if it's a more major card (master card, visa) keep it open. The way closing a credit card hurts you is this:
if you have 2 cards with a total of $1000 in credit available to you, and have $100 in debt, you are using 10% of the total credit allowed to you.
if you cancel 1 card, and now have $500 in in credit available and are still $100 in debt, that is 20% of the total credit available to you.
Lenders look at the big picture.

 

[ccgirl]

If you never use them; are you sure they are still active? I have several stores close their charges I had with them due to inactivity. They said they sent me a letter but I never received them. Sears was one of them. I only found out because I went to use the charge for a zero percent financing option. As to whether or not to cancel them; it depends on the big picture. How many total cards do you have out? What is the ration of what is charged to your credit limits? When I talked to my mortgage broker he said a revolving debt is a revolving debt and is treated the same regardless if it is Best Buy or Citibank. Seems to be varying opinions out there about this.

 

[My3kiddos]

If you have other credit cards with a balance I would not cancel the cards. If you do your credit utilization ratio will go up therefore causing your credit score to go down. It doesn't matter if it is a store credit card or major cc, both are revolving credit and treated the same when it comes to your credit utilization.

 

[shortbun]

Years ago, I closed all my department store/store specific accounts. Occasionally, I take advantage of a 12 months same as cash deal and end up with credit I have to get rid of. We only carry two credit cards, no balances, and a debit card. I charge things to show use and the ability to pay once in a while. I'm told this is the way to handle things and keep a good credit score.

 

[smokeyblue]

I'm im the process of buying a house and my mortgage broker told me to pay off and close the store credit cards. Everyones credit is different and I don't know if you'd get the same advice. I'd ask a financial professional that you trust.

If you close the accounts you can just call. There is no need to send a letter. The one card I closed had an option to instantly fax proof that the account has been closed.

 

[PatMcDuck]

I am in this situation, but have lots of cards, and some have very large credit limits, over $25,000 on a single card in a few cases. I am just about done paying them off, next month will be it. I am not sure what to do about keeping them vs closing some of them. I would close some for sure, if there was no "penalty" to our credit score.

I also have a couple of store cards. I kind of like the store only cards, I like getting the special coupons they mail out. I also never get into "trouble" with the store cards, the limit is lower, and I can only use them at that one store, so I never carry a balance on them (Kohls, JC Penney, Old Navy, I think I only have those 3).

 

[Paging Tom Morrow]

The answer should somewhat depend on if you are planning to make any major purchases very soon. The closing of any account will affect your credit score and could potentially NEGATIVELY affect your score as it will lower your current debt/available credit ratio.

 

[figment3258]

For us we just went through this. We paid off a lot of our cards and we decided to close them they all said when we called that is was so bad for our credit score to close them out but after we did our score went way up.

 

[ccgirl]

For us we just went through this. We paid off a lot of our cards and we decided to close them they all said when we called that is was so bad for our credit score to close them out but after we did our score went way up.

Just curious, how many points did it go up and how long did it take for the score to go up? THanks.

 

[kelcoppens]

Cut the cards up. But dont close the account. If you do, it may hurt your credit score

 

[chabs]

Maybe I'll just close one out every six months or so I'm not taking a bit hit all at once. I really don't plan on ever using them again since I'd rather use my rewards card. I just hate to leave "loose ends".

 

[girli565]

I'd close the store cards, but the major Visa/mastercard/Amex I'd leave open and maybe charge one small thing a month on them (and of course pay off immediately) just to keep them active.

I had a card send me a letter that they were closing my acct due to inactivity, lol. I paid it off and forgot about it. Oh well.

 

[chyam]

If you never use them; are you sure they are still active? I have several stores close their charges I had with them due to inactivity. They said they sent me a letter but I never received them. Sears was one of them. I only found out because I went to use the charge for a zero percent financing option. As to whether or not to cancel them; it depends on the big picture. How many total cards do you have out? What is the ration of what is charged to your credit limits? When I talked to my mortgage broker he said a revolving debt is a revolving debt and is treated the same regardless if it is Best Buy or Citibank. Seems to be varying opinions out there about this.

Exactly....I had several store cards that I hadn't used in awhile...went to use my JCP card just to "use" it and I was declinedI was pretty embarrassed because I knew I didn't have any credit issues, found out it had been closed due to inactivity.....some of the stores will notify you but others don't!

 

[Tink-n-MrIncredible]

What I did was close all my store accounts. I sent them a letter saying I wanted to close the account. I asked them to send me a letter stating that my account was by "my choice" and verify that I have a zero balance. I closed them several years ago. I still have the letters I sent and that they sent me in return. I think it is better if you close your accounts than have the card company close them on you.

I think Dave Ramsey has something like this in his book TMMO. If you check in the back they might even have a sample letter also. It has been a while since I read his book sorry if I am wrong.

On a positive note when I check my credit score it so easy to read and I only get one page.

Just my .02