Is it never a good idea to close credit card accounts???

[bcarson]

Let's say you pay several off. You don't trust yourself with all of them. Can or should I close some? I have heard that can be just as negative. Frankly that confuses me, but will look forward to the answers and explinations.

 

[MarilIncredible]

I am curious about this, too, now that it is entirely possible that "no annual fee" CCs are on their way out. I signed up for several cards for the sign-up rewards, and might use them once a year or so for a small purchase, but if they start charging me a fee, I'd rather just close them b/c I am not getting any additional benefits from them anymore. I'd just keep my 3 main cards.

Most of these other cards have smaller credit limits, like $5K or so, so closing them would not have much of an effect on my overall amount of available credit, if that makes a difference.

 

[ziggystardust]

i think, if you close a few at the same time, your credit report sees that as a negative. And if you close your oldest card, the credit report sees that as a negative.

I have closed cards in the past, still have the oldest and a couple of others open and my credit rating is pretty good

 

[bettymae1121]

It depends.

I know, that wasn't very helpful! But it really does depend. If you are totally CC debt free, then I would keep your oldest card, and slowly close all the rest (don't do it all at once). Your score will take a hit, but if you don't trust yourself not to run up the cards again, a credit score hit is better than the alternative.

If you aren't out of CC debt yet, then you need to be careful. Closing the cards lowers your total available limits, which increases your debt-to-limit ratio, and can REALLY make your scores tank. Ideally you want your balances to equal 25% or less of your limits (all added together).

 

[Nayan]

It used to be that you could pay off a card, close the account and nothing negative would happen. Now if you do that, it can really impact you. The problem is that even if you pay it off and do not use it, the bank can close it anyway. The Consumerist (disclaimer: I do not work for them or know anyone who does) has a few stories on how banks have closed people's accounts due to them not using them and really messing up their credit. And even one story about someone who called, got a lower interest rate, was transferred and their account closed. Either way it's a bad time to have lots of credit, but if you really don't need a loan (for anything) for awhile I would cancel the cards.

 

[prncess674]

I paid off debts several years ago and closed all my crazy store cards that I had opened for coupons and % discounts. Most were low limit cards. My credit score is still over 800. When you close a card it states on your credit report "account closed by consumer" which isn't bad like "closed by creditor."

I wouldn't be uber concerned about your credit score unless you are getting ready to purchase a home or a very expensive car. You may see a temporary small drop in score but a drop of 10 or 15 isn't life shattering and will jump back up as long as you keep your credit in good standing.

 

[rszdtrvl]

I am curious about this too.

We have 1 JCPenney card, 2 Chase Visa's, and we just got approved by our bank for another Visa.

One Chase Visa is paid off.

One Chase Visa has a balance of about $3,000.

The bank Visa we need to put a new roof on our house (our roof was supposed to last 50 years - when we bought the house 7 years ago it was only 6 years old - the previous homeowner put it on himself and did not do an acceptable job and it is now necessary to put a new roof on - as you can imagine, we are not happy, as this is not a budgeted expense).

We want to just keep the bank Visa and would like to cancel the 2 Chase Visa's. They are all below 10% APR. The JCPenney card is rarely used, but I like having it. I always think it is good to have one high interest department store card anyway. Even if you don't use it or rarely use it.

 

[ccgirl]

The big question is whether or not you will need loans (car/mortgage) within the next two years. 10 points can make a difference if you are on the cusp of certain ranges. For example, my mortgage broker said that a score under 680 makes it very difficult to get a mortgage loan. So, if you were already at 690 and closed a bunch of credit cards, it is quite possible your score would be under 680 and make it very difficult to get the mortgage. If you do not trust yourself, may I suggest cutting up the cards or keeping them frozen in the freezer?? I did have a card cancelled because I did not use it and it dropped my score about 10 points. Luckily, I was not on the cusp of a score range so I was okay. I know this makes no sense - your score dropping if you close cards. A lot of times this is due to your ratio of available credit vs. used credit. For example, you have credit cards with limits that total $20,000. You have $6,000 utilized. This means you are only using only 30% of your credit. If you close a card with $10,000 credit limit you are now using 60% of your available credit. Using more than 50% of available credit is very bad in the eyes of the lender. I hope this helps.

 

[prncess674]

I am curious about this too.

We have 1 JCPenney card, 2 Chase Visa's, and we just got approved by our bank for another Visa.

One Chase Visa is paid off.

One Chase Visa has a balance of about $3,000.

The bank Visa we need to put a new roof on our house (our roof was supposed to last 50 years - when we bought the house 7 years ago it was only 6 years old - the previous homeowner put it on himself and did not do an acceptable job and it is now necessary to put a new roof on - as you can imagine, we are not happy, as this is not a budgeted expense).

We want to just keep the bank Visa and would like to cancel the 2 Chase Visa's. They are all below 10% APR.

Can you help me understand why you are opening more charge cards for the roof? Is the rate any better than your current Chase cards?

The JCPenney card is rarely used, but I like having it. I always think it is good to have one high interest department store card anyway. Even if you don't use it or rarely use it.

What is your reasoning for thinking it is good?

 

[tinkerbelletreasure]

High interest store cards are probably the worst kind to have. As others have said, if you aren't planning on making any major purchases in the next 2 years, it will not affect you that much. Just make sure you have some savings in case somethgin catastrophic comes up. Dh and i just paid off a bunch of smaller cards and are plannign on closing them slowly one by one. But we are tryign to go a step further and make sure we have the amount of the card in a savings account, to cover emergencies since that is the main excuse to use them.

 

[Reagan&Co.]

If you have a Disney VISA, don't close it!!! My DH just did(after the free interest period ran out) and now we need it again to get cruise onboard credit!!!
There are enough benefits with this card that I think it's worth keeping buried in your underwear drawer, at least!

 

[PrincessSuzanne]

After I pay off a card tha tI won't be using again, I melt it, the there is no temptation to use it and I don't have to worry about the drop in my credit rating.

Suzanne

 

[moongirl]

This thread explains what happens to your credit report when you close a credit card and why you should probably not do it:

http://ficoforums.myfico.com/fico/board/message?board.id=creditcard&thread.id=117125

If you want to learn a lot about credit scores and anything about credit in general myfico.com has a forum with a ton of information there.

If you want to avoid the temptation of using the card, keep the account open but cut up the card!

 

[rszdtrvl]

Can you help me understand why you are opening more charge cards for the roof? Is the rate any better than your current Chase cards?


What is your reasoning for thinking it is good?

Yes it is - the rate is 1.9% for the first 6 months. With a lot of scrimping and pinching, and DH possibly working overtime, we are hoping to have the card paid off by the time the regular rate (9%) goes into effect.

Reason for thinking the JCP card is good is because it is one of my oldest credit cards. I use it maybe 2x/year for small purchases. And pay them off in 2 months by splitting the payments, making it an active card.

 

[pampam]

I keep my CC in a plus balance- Just $10.00 or so. They won't close the account and I like it when they owe me money instead of me owing them money. I like getting the bills now.

 

[TammyAlphabet]

Don't worship at the altar of the great FICO!---Dave Ramsey

 

[quentina]

I closed all mine. My score took a huge hit however; the reality was, I am not disiplined when it comes to plastic. If I cut up cards, I could still use number or order replacements.

I did this a few years ago.....it was the best thing I ever did.

With the help of a few amazing promotions at work and no plastic....I have no CC debt. In addition, I did not have any problem getting approved for a car loan 1.5 years ago.

Your score will take a hit...you have to decide if it is worth it.

 

[eliza61]

Let's say you pay several off. You don't trust yourself with all of them. Can or should I close some? I have heard that can be just as negative. Frankly that confuses me, but will look forward to the answers and explinations.

You know some thing, I think the entire thing is a con. Here's why. I have a bunch of opened accounts zero balance (hey I'm 50, I've had a few cards here and there )
I got my fico score a few weeks ago, ok it's pretty good but they had a note saying that one of the reasons it's not higher was because I have all these open accounts. WTH?
So if I close them I get dinged but if I keep them open I get dinged.

Op, whatever you do it will be a negative. The banking system is as corrupt as the mafia, they just don't have professional hit men. Just like in Vegas, the house always wins.

 

[ICF]

This thread explains what happens to your credit report when you close a credit card and why you should probably not do it:

http://ficoforums.myfico.com/fico/board/message?board.id=creditcard&thread.id=117125

If you want to learn a lot about credit scores and anything about credit in general myfico.com has a forum with a ton of information there.

If you want to avoid the temptation of using the card, keep the account open but cut up the card!

as with most things though, your milage may very.......I called and cancelled my CitiRewards card as I seldom used it and now they wanted to charge an annual fee. It was a no brainer to cancel and i would suggest people cancel any non-used cards that decide to start charging you fees.

 

[SDSorority]

So let me get this straight... the moral of the story is cut up or freeze or melt your credit cards, don't close your accounts?