Comments on: Should You Close Your Credit Card Account?

By: Snoopy

Snoopy — Wed, 17 Mar 2010 20:13:35 +0000

@ Nichole January 13, 2010 post. Lower those credit limits asap!! That happened to my husband and I . Sure enough an “emergency” would come up over and over and before we knew it we were in cc debt of $19,000. A $10,000 credit limit is ridiculous and irresponsible of the cc issuing companies. Unless you earn $150,000 or more I would lower the limit to what is was. Why risk the temptation? Also I do not think it affects your score at all. After all you did not request the increase and have not charged against it yet.

By: Terry

Terry — Mon, 01 Feb 2010 20:01:58 +0000

My question is : Are any points cards actually worth it when often you end up paying yearly fees for them?

After I pay off all my debt my partner and I might consider one for obtaining flight rewards, (we have looked at Avion and a few others), but I see many of them have huge fees and many restrictions.
Are they really worth it overall? Does anyone have good strategies for accumulating points on these cards?

I know in general using a credit card when you can is better then your debit because you don’t have to worry about your banking plan transactions, (as long as you go home and pay it off right away of course).

Thank you!

By: KL

KL — Mon, 18 Jan 2010 21:01:07 +0000

For me, I was so fed up with the companies, between raising rates on my zero balance cards to being just difficult to deal with and closing accts for no reason other than inactivity despite my good credit score. I closed accounts and yes it hurt my score, but I won’t give you my business if I am not treated well. I plan to be debt free by the end of the year and I wish any of those companies try to regain my business. A big fat no!!!

By: Mary

Mary — Mon, 18 Jan 2010 15:04:30 +0000

Which credit cards now have the lowest itnerest rates? Citibank Mastercard is raising its rates from 9.9% to 23.99% after March! Very hard to swallow. Not sure I want to keep my account open now.

By: Susan

Susan — Mon, 18 Jan 2010 14:40:51 +0000

I had heard exactly what Geoff had said, that by cancelling a card, the percentage of debt used vs available goes up which looks bad on the credit report. Also, I don’t like to cancel the cards just in case an emergency comes up and you need instant access to cash. I do store them in my safety deposit box to limit access (by me and also by scammers).

Susan

By: Booties, Chickens, and Link Love Oh My! | Squawkfox

Booties, Chickens, and Link Love Oh My! | Squawkfox — Sun, 17 Jan 2010 22:26:56 +0000

[...] Should You Close Your Credit Card Account? | Gail Vaz-Oxlade [...]

By: Breanna

Breanna — Fri, 15 Jan 2010 02:47:50 +0000

Hi everyone,
Just wondering if anyone knows how long the dip in credit score lasts after cancelling a credit card?? My husband and I would like to close our Sears and Bay accounts but not if the effects are long lasting. Anyone have an idea??

By: Sparky

Sparky — Thu, 14 Jan 2010 12:12:24 +0000

TD Visa will no longer be issuing auto increases to VISA accounts…they must have the clien’t agreement BEFORE any increase…probably the same is true for other VISA’s as well…should help stop the credit madness!..lol..

By: Marie

Marie — Wed, 13 Jan 2010 22:55:28 +0000

Nichole:
Some recommend using no more 50% while other 75% of your available credit (I don’t know if LOC are included in that). I think I got those percentages from Equifax and Transunion. Above that, your # drops, below that, they consider you ‘ok’. If you pay on time, they consider you ‘ok’. If you do all that and pay interest, they think you are ‘better than ok’, but Gail does not.

By: Geoff

Geoff — Wed, 13 Jan 2010 22:26:53 +0000

Nichole, the short answer is: probably.

One part of the credit assessment is to look at the % of credit that’s being used, versus available.

So if you owe $100 total but have two $500 limit cards, you are using $100 out of $1000 ($500 x 2) available credit, or 10%.

Let’s say that $100 was all on card A. If you cancel Card B, you are now using $100 out of $500 available credit, or 20%. Or if you reduce Card B by x %, your use of available credit goes up by x %, etc.

The higher up on the scale, the more risky you are perceived to be. Which in the overall outlook makes sense — I mean if you were to extend $500 credit to a friend, and he immediately borrowed $499, you might be nervous. On the other hand, if he borrowed $5, you might not totally freak out. Not that I’m advocating loaning to friends, you often lose the money and the friend.

Personally, I think two cards is very reasonable and would not cancel either. Be sure there aren’t any fees on those cards, though. g

By: Nichole

Nichole — Wed, 13 Jan 2010 20:40:59 +0000

I have two credit cards as well, a VS and a MC, MC has 0 balance and VS unfortunately I got into some trouble with when I was out of work for a year but will it be paid off in about 12 months now and I will have accumulated a nice little savings by then. I feel like i’ve finally got things on track, I have zero desire to use my credit cards but worry about cancelling them as I don’t want to screw up my credit rating. I too have noticed that the credit card company has increased my limit on both cards to 10K (!!!!!) and as an above poster asked, am curious to know if I call and get it lowered to something reasonable will that somehow negatively affect my credit rating?

By: Gail

Gail — Wed, 13 Jan 2010 11:16:35 +0000

Marie, the credit card companies desperate to cover their losses — and there are more to come — because of defaults are tacking on fees any place they can. Traditionally, there have’t been fees so it made no difference if you closed the account immediately. If your credit card company is now threatening a fee you have two options:
1. close the account completely, or
2. Make sure you put one charge (which you pay off immediately) on your card to avoid the fee.

By: Sharon

Sharon — Wed, 13 Jan 2010 04:36:20 +0000

Wow, a lot of great info.

My boyfriend and I each have a BMO mastercard. My boyfriend’s is at $1000, with 11% interest, after consolidating two $500 cards charging 18%. My card is at $8300 with 11% interest, brought down from 18% after switching to an annual fee card.

I was talking with him about the possibility of just closing our accounts and getting them paid off, but now that I’ve read all this, It might be better to keep them. His limit is reasonable, and as I pay down mine, maybe I can get the limit of $9800 dropped until it, too, is $1000, as well as paying it off in full.

Plus, we’ve both run into situations where we had run into the end of the money when something essential came up to purchase. For example, fuel to make it home when there’s no money in the bank, and payday is 2 days away. Poor budgeting, true, but this was way before I found this site, and our budgeting system is far from perfect so far.

Thank you everyone.

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Wed, 13 Jan 2010 03:08:01 +0000

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By: Marie

Marie — Wed, 13 Jan 2010 02:49:23 +0000

Melaniesd:
I know that some Store’s credit accounts get closed when not used. Ok, at least there is no fee.
I just don’t remember (did I miss it) reading that MC and VISA charge you for that. If they do, why would Gail recommend to leave accounts opened and unused?