Cancel a credit card?

Zhoen

FairieVillainMother
Joined
Apr 24, 2011
Messages
925
Hi Y'all,

Our disney trip was great, we had a lot of fun blowing all those points we'd saved up on our DRV... but now it's over, it's paid off, and I'm not going back for a really long time...

In other words, I won't need the points anymore... So I'm thinking of cancelling the card now (we've had it for about a year.) We're in the proccess of paying off all the debt we can, and my instinct is to close things as we do, and just keep one card for emergencies/convenience (of booking things with a credit card guarantee), probably going to keep the Discover for the cash back....

So will it hurt our credit if we cancel these as they are paid off? Or is it better to keep them open and charge a tank of gas each month, or...????
 
I would keep at least 2 cards. That way if one got compromised on vacation, you can use the other one.


ETA: just use it once a month and pay it off.
 
Don't do it...It will impact your FICO score.

Put the card away, don't use it, save it for a rainy day!

I would recommend you take it out once every couple months, buy something inconsequential and pay the bill off as soon as it arrives. That way you keep the card active and don't risk the CC company canceling your account due to inactivity.
 
Don't do it...It will impact your FICO score.

Put the card away, don't use it, save it for a rainy day!

I would recommend you take it out once every couple months, buy something inconsequential and pay the bill off as soon as it arrives. That way you keep the card active and don't risk the CC company canceling your account due to inactivity.

Does your FICO score get affected regardless of if you, yourself, cancel your card vs the CC company canceling it themselves?
 

Does your FICO score get affected regardless of if you, yourself, cancel your card vs the CC company canceling it themselves?

its based on outstanding credit in your name versus what you have actually used...so if you have 100K in credit and have a 10K balance, thats 10% in debt KWIM...there is a specific name, its the debt something ratio, my mind is LOST tonight sorry. So if the cc closes it (like for non use) and you have more debt and Less credit it can affect you...and I dont think you can do anything about it technically (but Id clarify WY they closed it) Thats why one should not just close out a cc. The longer you have it OPEN the better...charge on it and pay it off ...:thumbsup2
 
Don't do it...It will impact your FICO score.

Put the card away, don't use it, save it for a rainy day!

I would recommend you take it out once every couple months, buy something inconsequential and pay the bill off as soon as it arrives. That way you keep the card active and don't risk the CC company canceling your account due to inactivity.

On the radio, Clark Howard says that just using the card once every six months is enough activity.

gary
 
Does your FICO score get affected regardless of if you, yourself, cancel your card vs the CC company canceling it themselves?

Yes! I learned the hard way. I was working on paying off all my debt, and thought it would be a good idea to pay off a card and cancel it. Well, my credit score dropped, and as a consequence another card raised my interest rate. Then another card lowered my credit limit, which caused my score to drop again. Ugh. :headache:
 
its based on outstanding credit in your name versus what you have actually used...so if you have 100K in credit and have a 10K balance, thats 10% in debt KWIM...there is a specific name, its the debt something ratio, my mind is LOST tonight sorry. So if the cc closes it (like for non use) and you have more debt and Less credit it can affect you...and I dont think you can do anything about it technically (but Id clarify WY they closed it) Thats why one should not just close out a cc. The longer you have it OPEN the better...charge on it and pay it off ...:thumbsup2

This makes sense. Thank you!

Yes! I learned the hard way. I was working on paying off all my debt, and thought it would be a good idea to pay off a card and cancel it. Well, my credit score dropped, and as a consequence another card raised my interest rate. Then another card lowered my credit limit, which caused my score to drop again. Ugh. :headache:

Oh wow. I have a ton of CC's that I don't use, and are just sitting hidden away, and figured I could just close them. Guess I won't now!
 
Oh wow. I have a ton of CC's that I don't use, and are just sitting hidden away, and figured I could just close them. Guess I won't now!
There is a "correct" way to do it. Maybe someone will come along and explain it. Once your overall debt is very low you can cancel a card. Your credit score will take a hit, but if you don't owe a lot of money it won't be too bad. Then you wait for your score to come back up and cancel another card. I don't recall the exact length of time you should wait between cancellations though. I also don't recall the target debt percentage you should wait for before closing the first account.

I do recall that you should not ever close the account(s) that you have had the longest. Keep those ones.
 
Well, this is our newest card, and I have others that we've had FOREVER, so I'm leaning toward cancelling this one, but maybe not until we get the next one cleared, which is one we're planning to keep long-term (Upromise).

I think we're planning to keep a Discover Card and a Upromise Card.
 
Not everyone takes Discover card so it is a good idea to keep at least one Vias/Mastercard as well. We have American Express as well as Visa's and lots of places do not take AMEX/Discover.
 
It's a balance thing with the FICO and what you plan to do that may use credit may have different views on it.

Generally, yeah, closing cards will drop your score some because you have less available credit and thus a 'worse' debt to credit ratio, which in theory makes it more likely that you'd default (not that you would, even if someone has perfect history, it's just statistics saying that if someone only has $1000 in credit they're not using, it's more likely that they may run into some issue where they need money more or need more than that for some random thing and then may default or etc.) and makes it seem as if you use credit to live on.

Even if you're not using a lot of it, and pay it off every month, if someone looks at the ratio on a week before you pay it and sees you're using 90% of your available credit (even if the available credit is just $500), looks like there may be money issues that could lead to eventual default.

However, having a ton of open cards and open lines of credit that you're not using can ALSO make you look like a risk. Someone with an average income of, say, $50,000, that has $150,000 worth of open credit (any open HELOC lines that you're not using show up in there too) looks like a risk because you theoretically could get into deep financial trouble very quickly because the $$ is available to you to run up in credit if you choose.

Hence, you want enough credit available for your own purposes (and I agree a MC or Visa would be wise in addition to a Discover, just for ease of use) in case you need to make a bigger purchase or need to book airline tickets unexpectedly or whatever, and then a little extra cushion, but not so much that you could start a festive and productive criminal career should you run up the credit and bolt.
 














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