Should I close my account?

[DreamDelta]

I am doing a debt snowball to pay off my debt. I made the final payment on my Macy's credit account and I'm wondering if I should close the account. Will my credit score suffer tremendously if I close the account?

Thanks in advance for any and all advice!

 

[undertheradar]

Good for you! I don't see the need to close the account unless it is costing you money or you will feel too tempted to use it.

 

[PrincessSuzanne]

I don't think your credit will suffer tremendously, but it will make it drop. I would just leave it alone and forget about it, that is much better for your credit.

Suzanne

 

[CouponAngie]

Hello!

From your terminology of calling it a "Debt Snowball" I'm assuming that your plan may have something to do with Dave Ramsey. If it does, then here's what he has to say about it:

Close Your Cards
QUESTION: Tom has 25 credit cards with no debt. Is it harmful to close them out?

ANSWER: It’s only harmful to close the accounts if you worship at the altar of the FICO score. Closing credit cards lowers your FICO score. The FICO is an I-love-debt score. You have to go into debt to get it, so if you’re not borrowing money, who cares how low it gets? Close them out!

My DH and I did the "Debt Snowball" after attending FPU just over year ago and it changed our lives. We are now out of debt, except for the mortgage. It really brings a sense of freedom.

If you aren't using that terminology because of DR, sorry for my assumptions! You really should Google him for some good info!
Good luck to you!

 

[tlbwriter]

Dave Ramsey thinks no one needs a good credit score. Easy to say when you're a millionaire and can pay for everything with cash. If you ever think you'll need to borrow money to buy a car or house, and if you can resist the temptation to use that card, keep it open.

 

[DisneyOHFan]

If it's closed, you don't have to worry about anyone getting your account # and using your account.

 

[ancestry]

Close Your Cards
QUESTION: Tom has 25 credit cards with no debt. Is it harmful to close them out?

ANSWER: It’s only harmful to close the accounts if you worship at the altar of the FICO score. Closing credit cards lowers your FICO score. The FICO is an I-love-debt score. You have to go into debt to get it, so if you’re not borrowing money, who cares how low it gets? Close them out!

My only concern with doing this is sometimes in life we do need credit. Unexpected things happen or sometimes an unexpected move happens that involves selling and buying a house. With a low FICO score you might not be able to get a mortgage or if you do it is one with a HIGH interest rate.

I've learned to never ever say never. When DH and I bought our first house we never thought we would sell it and would have to move out of state. We fully expected to stay in that house long term.

Without any advance warning both of us lost our jobs within months of each other and the only job DH could find was here in Maine. We had to sell our house and buy a new one -- completely and totally unexpectedly.

Now if you have enough money on hand or equity in your first house that you can do such a thing without a mortgage then by all means close all of your accounts BUT if you aren't there yet, then I do think a credit score is important.

 

[JKMJ441724]

I keep only my OLDEST credit card open. If I get one here or there that has a one year interest free or I get an extra % off my purchase for opening an account. Once the interest free promotion expires or after I've made my purchase, I close those accounts. I don't want to have to worry about identity theft.

that's my two cents.

 

[taylor3297]

Depending on the limit of your balance, determine how much your FICO score will drop. The formula for debt to credit will be a higher ratio thus the lower score. Now Dave Ramsey wants you to have is a zero credit score. This tells banks, mortgage companies etc, is that you have no debt! You can still buy a house and car.

Now if you are going to use credit, I would have just one major credit card and get rid of all the department store cards.

The one credit card will allow you to book hotel rooms, rent a car ect. when necessary. Also, so you really do need to purchase something on credit at a department store,then you have the one major credit card. It is much easier to keep track of your spending with one card than several.

About 10 years ago, I closed all of my department store cards and luckily my credit rating did not suffer much. Today, due to having a mortgage and a car payment, my credit score is quite excellent.

I don't follow Ramsey to the letter. I still buy new cars and I do use a major credit card that is paid off each month.

 

[2disneyboys]

If it's closed, you don't have to worry about anyone getting your account # and using your account.

Good for you! I don't see the need to close the account unless it is costing you money or you will feel too tempted to use it.

ITA w/ both of these. If you use the snowball termology because of a Dave Ramsey program, he says to close them. (if not, forget I said that!) I however, don't ALWAYS agree w/ that part of DR's program. I think Dave's principals and practices are excellent and I follow many of them.. however, I also know that FICO score is important.. not only for borrowing money but also for insurance rates and sometimes even jobs. I do think that if you will be tempted to use the card again, then I would close it. The ramifications of closing it (reducing your total "available credit" as well as potnetially your "lenght" of credit (active accounts)) is that your credit score will likely take a small dip, but should recover quickly assuming you continue to pay your debt on time and work to close out any other debt. I actualy paid off what little debt we had (except our house - we still owe on it) and closed almost all of my cards (I have left open my USAA American Express just because I don't feel secure enough w/ the emergency savings we have built up.) Once I feel more secure in that area, I will prob close that account as well.

 

[CouponAngie]

I agree with those who said that if you feel you must keep a credit card open for your FICO score, then do so with a major credit card rather than a department store card. Having to use a major credit card for an emergency, if you don't have an emergency fund in place, I can see. Having a Macy's account open for "emergencies", well, that would just equal trouble for me!

Not trying to make everyone drink the DR kool-aid , It's different strokes for different folks. It's worked for us, but I can see that it's maybe not once size fits all for some of you.

Good luck with whatever decision you make.

Take care!!!

 

[jmartinez1895]

Ok, i know that many will disagree, but I have been dealing with the same thing. If your card is a store issued card and not a card from a major carrier like Visa or master card then close it. I have had a long talk with my aunt on this subject. She is a CPA and credit adviser. She also worked with Chase as a CEO. She said that store cards can lower your score because almost anyone can get one and it is very easy to over spend. I closed 4 store cards and within 2 month my score was up by 20 points.

 

[timmac]

Hello!

From your terminology of calling it a "Debt Snowball" I'm assuming that your plan may have something to do with Dave Ramsey. If it does, then here's what he has to say about it:

Close Your Cards
QUESTION: Tom has 25 credit cards with no debt. Is it harmful to close them out?

ANSWER: It’s only harmful to close the accounts if you worship at the altar of the FICO score. Closing credit cards lowers your FICO score. The FICO is an I-love-debt score. You have to go into debt to get it, so if you’re not borrowing money, who cares how low it gets? Close them out!

That's not entirely true... credit score can still make a difference for things such as insurance rates.

Going back to the OP, I'd say it depends on how many total cards, etc, you have. Leaving a few accounts open is not a bad thing to do, as long as you won't be tempted to abuse them.

Closing it, yes, probably will lower your score slightly. Exactly how much is very very hard to say. (And there's no magic formula for it either)

All of that said, if I were to close out any accounts, it'd be a store card before I'd close out any major credit card.

 

[DreamDelta]

Hello!

From your terminology of calling it a "Debt Snowball" I'm assuming that your plan may have something to do with Dave Ramsey. If it does, then here's what he has to say about it:

Close Your Cards
QUESTION: Tom has 25 credit cards with no debt. Is it harmful to close them out?

ANSWER: It’s only harmful to close the accounts if you worship at the altar of the FICO score. Closing credit cards lowers your FICO score. The FICO is an I-love-debt score. You have to go into debt to get it, so if you’re not borrowing money, who cares how low it gets? Close them out!

My DH and I did the "Debt Snowball" after attending FPU just over year ago and it changed our lives. We are now out of debt, except for the mortgage. It really brings a sense of freedom.

If you aren't using that terminology because of DR, sorry for my assumptions! You really should Google him for some good info!
Good luck to you!

I am using a modified version of Dave Ramsey's plan and really like how the debt snowball is working for me.

 

[DreamDelta]

Hello!

From your terminology of calling it a "Debt Snowball" I'm assuming that your plan may have something to do with Dave Ramsey. If it does, then here's what he has to say about it:

Close Your Cards
QUESTION: Tom has 25 credit cards with no debt. Is it harmful to close them out?

ANSWER: It’s only harmful to close the accounts if you worship at the altar of the FICO score. Closing credit cards lowers your FICO score. The FICO is an I-love-debt score. You have to go into debt to get it, so if you’re not borrowing money, who cares how low it gets? Close them out!

My DH and I did the "Debt Snowball" after attending FPU just over year ago and it changed our lives. We are now out of debt, except for the mortgage. It really brings a sense of freedom.

If you aren't using that terminology because of DR, sorry for my assumptions! You really should Google him for some good info!
Good luck to you!

Your assumptions were right!

 

[Planogirl]

If you won't be tempted to use it, I'd leave it open.

I don't agree that anyone can get a store card. We get plenty of calls from people who were declined by stores for one reason or the other. Many of these stores have parent banks so it's not like banks have nothing to do with it.

 

[disneyfreakk]

Do you get any perks for having the Macys card when shopping at Macys?

 

[walkdmc]

If you're not applying for a big loan in the next year, I wouldn't worry about it and I would close that card.

I hate Macy's CS/CC btw. They have outsourced everything and they are terrible. I can't even believe the stuff they did to my credit card when I opened a new account 4 years ago. I paid it off and closed it without a moment's hesitation. I don't trust them. I would not want my account just sitting there, unused, in their hands.

 

[DreamDelta]

I decided to close the account. I hadn't used the card in quite a while and just didn't want to be tempted to use it!