Best way to close a credit card?

[spasm3]

I am probably going to get a costco credit car for the reward/cashback benefits. I have 2 other cards, one of which i don't use and won't use. I never carry a balance on any card, they are paid off each month. The card i want to close does carry a large credit line.
I have been told that closing a card down can affect your credit rating negatively. Whats the best way? i don't want too many lines of credit.

Never use it? contact the card company and ask for it to be closed?

Thanks

 

[VeeDubb]

If there is no annual fee, why close it? Just take it out of your wallet and put it in the folder. Your credit score increases with the age of your accounts and low credit utilization.

 

[expat]

I always keep 2 cards, just incase one is lost or there is some glitch.

I change using my cards from time to time, because I want the best benifits. So I may end up with 3 cards or more.
If that is the case, I just put them away, or cut them up, and let them expire.

I'm debit free (for 20 years), I don't care too much about my credit record.

 

[DBMaster]

Make sure to use a card every once in a while so it doesn't get closed due to inactivity. That's what Discover did to me. I keep an automatic payment on my rarely used cards - the cell phone bill, for example.

 

[xshoex]

Keep it open and use it once a month for gas or milk

 

[Leo99]

Originally Posted By: VeeDubb
If there is no annual fee, why close it? Just take it out of your wallet and put it in the folder. Your credit score increases with the age of your accounts and low credit utilization.


This is very true. For example, your total credit limit when you add up all your credit card accounts is $20,000. You charge some tires and wheels or whatever for $2000. Now, you've utilized 10% of your credit. Not bad. If you close down an account that lowers your total and would increase your credit utilization. That makes your credit score go down.

My current credit score is 814 and some factors that are affect it detrimentally are low number of accounts and young age of the accounts. After declaring bankruptcy (ex-wife issues), I had to start over the age and number of my accounts is lower than it would have been.

My advice concurs with the above, just keep it open and use it occasionally to keep it active.

 

[abycat]

I don't know if Canada rules are different than American but if up here you have to many cards ie. available $ to you the next time you get another loan it may impact it negatively. if it was me I would call them up and cancel it.

 

[Wolf359]

I used to play the 0% balance transfer game and also opened several accounts where they were offering good promos. After a while, I stopped using them. I just put the cards away and every couple of years, they send me a new one. For the ones that I haven't used in years, they eventually closed them, but they all seem to hope that I'll start using them again so some are still active even after years of not using them. It's always good to have a few cards for backup. I usually have at least 2 that I use all the time, one is for regular everyday charges and the other is for recurring monthly charges. At first it was just one card, but then it'd get hacked or lost and then I'd have to switch over all the card numbers so it was easier to just keep one where the number didn't get used and then another in case it gets hacked or lost. Never really canceled a card as there's no real reason to, the banks will do that to you eventually if you don't use it.

 

[Donald]

Originally Posted By: spasm3
I am probably going to get a costco credit car for the reward/cashback benefits. I have 2 other cards, one of which i don't use and won't use. I never carry a balance on any card, they are paid off each month. The card i want to close does carry a large credit line.
I have been told that closing a card down can affect your credit rating negatively. Whats the best way? i don't want too many lines of credit.

Never use it? contact the card company and ask for it to be closed?

Thanks


Unless there is an annual fee never close a credit card account. Basically your total credit will be reduced and if you have a balance on your other credit cards the balance to total (combined for all cards) will increase possibly reducing your credit score.

Having a reasonable number of credit cards with no balance does not effect your credit score.

 

[totegoat]

I put unused cards in the safe. Why take a credit hit closing them?

 

[dishdude]

Do whatever you are comfortable with. I prefer to close unused credit cards that I have no intention of using in the future. My credit history is well established, an open CC account isn't going to have an impact.

If you're still building or repairing your credit, then you might want to keep it open.

 

[The_Jeff]

To answer your question, the best way is in writing. There's a correspondence address on the back of the card, and on your bill. May not be the payment remit address.

 

[Kuato]

Originally Posted By: spasm3
I am probably going to get a costco credit car for the reward/cashback benefits. I have 2 other cards, one of which i don't use and won't use. I never carry a balance on any card, they are paid off each month. The card i want to close does carry a large credit line.
I have been told that closing a card down can affect your credit rating negatively. Whats the best way? i don't want too many lines of credit.

Never use it? contact the card company and ask for it to be closed?

Thanks


All good advice above. If you're not concerned about the impact to your credit rating then simply call their customer service and ask them to close the account. They'll likely get you over to the retention department to try to keep you and you'll get to talk to them.

I've closed a couple of older accounts with banks that I no longer desired to have a relationship with. Felt good to flush them - and now my credit reports indicate my accounts haven't been open long enough. Big deal, I'm with the companies I want to be with and the longevity is only increasing. Besides, there are more important factors for credit rating and it's only about a 20 point hit IIRC.

 

[HTSS_TR]

I had and still have too CC's. One time I had more 15-20 CC's with total credit line more than $500,000, the smallest credit line was no less than $10,000 and the highest was $50,000.

With that many CC's did it hurt my credit score ? No, not at all. My credit score was as high as 842-843 out of maximum 850, when I refinanced my previous house in around 2003-2005. The mortgage broker told me the highest he saw was 849 and I was the second highest he ever saw. My latest credit score was 833 last I checked about 2-3 weeks ago, any score above 800 is pretty good in my book, between 750 and 800 is acceptable and below 750 is not.

The key is never pay late, pay off balance very month and don't owned more than 15-20% credit limit of any card.

 

[VeeDubb]

If OP is going to close, a simple phone call will do it. I have an annual fee card that I have been trying to close for 7 years now. Every year I call to close, and every year, they waive my fee and throw in a few perks. Works for me.

 

[cheech279]

Here's a decent compromise. Keep the card you were thinking of closing, but ask the bank to reduce your credit limit. Then it will have less negative effect than eliminating your credit available on that card. Use the card once a quarter to keep it active.

 

[Wolf359]

Originally Posted By: HTSS_TR
My latest credit score was 833 last I checked about 2-3 weeks ago, any score above 800 is pretty good in my book, between 750 and 800 is acceptable and below 750 is not.


Actually you get the best rate if your score is about 740. So it doesn't matter if it's between 740-850. Below 740 you don't get the best rate, but it'd still be decent. If you're below a 620, then you're falling into the subprime group. Scores in the 400-500 range means you're real deadbeat.

 

[HTSS_TR]

Originally Posted By: Wolf359
Originally Posted By: HTSS_TR
My latest credit score was 833 last I checked about 2-3 weeks ago, any score above 800 is pretty good in my book, between 750 and 800 is acceptable and below 750 is not.

Actually you get the best rate if your score is above 740. So it doesn't matter if it's between 740-850. Below 740 you don't get the best rate, but it'd still be decent. If you're below a 620, then you're falling into the subprime group. Scores in the 400-500 range means you're real deadbeat.

I didn't know that, but I like 800+ because it looks good. Also, 8 is the lucky number according to Chinese(no, I'm not Chinese).

 

[VeeDubb]

Originally Posted By: Wolf359
Originally Posted By: HTSS_TR
My latest credit score was 833 last I checked about 2-3 weeks ago, any score above 800 is pretty good in my book, between 750 and 800 is acceptable and below 750 is not.


Actually you get the best rate if your score is about 740. So it doesn't matter if it's between 740-850. Below 740 you don't get the best rate, but it'd still be decent. If you're below a 620, then you're falling into the subprime group. Scores in the 400-500 range means you're real deadbeat.


Now that even dating sites are using fico scores, I'm guessing the optimal score would be in the 700-750 range. Too high and you might be tagged as an accountant. 720 = fun and yet marriage material.

 

[JHZR2]

If you pay them off each month, I wouldn't even worry about credit utilization or anything else. If you're that concerned, then apply for the new one then cancel the old one upon receipt.

I call to cancel so there's a voice record, then follow up in writing. Not sure it's necessary all the time, but I have seen some old accounts remain on my credit years after closing them, so sometimes it is needed. Don't want a thief somehow figuring it out and getting a new card somehow.

Since Costco is transitioning from Amex to visa, what card exactly are you looking to get?