Post # 1
i’m very phobic about messing up my credit because i have an excellent credit score and don’t want to jeopardize it! i have one credit card open that has 0 APR for the next year that i’m earning cash back bonuses on now but will pay it off and stop using it completely when the interest rate kicks in.
i recently opened a second credit card because it had a really attractive sign-on bonus if you spend X amount of dollars in the first three months. we had a big wedding-related downpayment due soon that would cover that, so i thought it would be great to use the card for that, get the bonus points and then pay it off in full immediately.
well, we ended up making the downpayment before the card came in the mail and now i don’t need it/want to use it. it just came in the mail a week or two ago and i haven’t even activated it yet. what do i need to do to close the card completely? after the first year there will be an annual fee so i don’t want to keep it open.
will it affect my credit score at all to close it so quickly?
Post # 2
It shouldn’t affect your score much, if at all. You won’t be going from having excellent to poor credit.
Just call the credit card company to cancel.
Post # 3
Why not just use the card for all your expenses until you reach what you need for the bonus, get the bonus then close it. Seems like a waste to have opened it to get a bonus and then not even bother since you already have the card in hand imo.
Post # 4
<— What she said. When does the annual fee kick in? You can also call the credit card company up and try to negotiate your annual fee. These companies would rather keep their customers and waive a fee then see you cancel your card.
And you don’t have to stop using a card completely. That can actually hurt you. As long as you use a card and can pay it off each month it shouldn’t matter what the interest rate is.
Post # 5
yes, it will affect your score if you apply for a credit card then close it. I think it’ll benefit you more to just leave it open and just use it here and there. Plus that new account, whether you’ve activated the card or not, is already being reported on your credit report.
Post # 6
depending on your credit history/debt to credit ratio/credit limit on that card vs other cards..it will affect your credit score. It shouldnt be by much. My husband had a 715middle score and closed a few cards after we purchased our house (didnt need them but wanted to wait till we closed) it brought it down to 699. But depending on your personal factors it may only affect by a few points. It goes down by a few points when you get a credit card because they check your score. A few points wont affect you if you have really good credit score. I have not seen a benifit of have anything over 750, so if youre over 800 a few points wont affect you much.
Post # 7
You can always use the card to make an early payment in addition to your downpayment. We made most of our deposits months ago, but I was just recently approved for a similar card with amazing travel rewards, so we had two smaller deposits put down, our expenses for two months, and we still needed to spend $1k, so we made an early payment to our venue.
Post # 8
Having varied credit helps your credit – ideally this is different types, but having two credit cards can be helpful provided the balances are kept low in comparison to available credit and they are paid off each month, but used semi-regularly to maintain activity.
Having a lower percentage of your available credit being used generally has a positive impact on your credit. For example – If you have two cards which both have a max of $5,000 ($10,000 total available credit) and you have $1,000 on one of the cards, you are only using 10% of your available credit. If you only had one of those cards and $1,000 on it, then you are using 20% of your available credit. Even if you pay off your cards every month, the time that your credit card company reports to the credit agencies may be during your monthly cycle, and may still show you with a balance for a given month. We pay our cards off every month (actually, twice a month we bring the balance to zero), but I still have Experian showing me with a balance most months because of the way it’s reported. This is fine as long as you aren’t maintaining large balances – my balance that Experian shows is usually less than 10% of my available credit, so this does not negatively impact my score.
Usually your credit is “dinged” 3-5 points when you get a new card, but your score should recover from that within a couple of months – keeping the credit card may also help with your score by diversifying your credit (all of the information I have found does say that you do need to use the card at least every few months to get the benefit to your score). I would not close it until there is an annual fee – even then, as another bee suggested, you can negotiate these – I have had a particular skymiles card for three years, every year I tell them I will cancel because of the annual fee and every year they wave it. Also, again as another bee said, it doesn’t matter what the interest rate is as long as you are paying it off every month.
Post # 9
And as long as you have cards and are paying them off, I dont think your score is effected much. I’ve never really though about what opening and closing cards would do. I have had upwards of 10 or more lines of credit (4-5 major cards -visa, discover, etc and 4 or more store cards) and had great credit score. I closed a crap load of store cards and 2 major cards… still a great store. Opened a airline one for a year to get the bonus miles, closed it after 11 months so I dind’t have to pay a anual fee… my score has always been 700-750 and I’ve had no issues getting the best rates for my mortgage, refiance, and a 0% car loan. There’s no need to be *that* paraniod about messing up a credit score. As long as you’re paying on time… you’re usually doing just fine.
Post # 10
also consider what other credit you might need soon. if you were applying for a mortgage in the next two months I’d say leave everything alone until after you close, but if you have a stellar score now and don’t need any new loans for awhile then I wouldn’t worry too much about closing the card – even if it dings you a teeny bit you’ll bounce back soon.
Post # 11
Thanks for all of the great info! i guess i was just afraid of forgetting to call and cancel a year from now to avoid the annual fee and wasting money on that. i can be a bit forgetful so i was also worried about charging small monthly expenses on it and then forgetting to log in and pay them off each month.
i do see the benefits of keeping it open for a while so i’ll think on it a bit more before i close it. thanks for the help!
Post # 12
Join CreditKarma, it’s free! They have a lot of useful info on there. Of course they also offer you credit cards, which you can ignore if you want.
Post # 13
Two words – AUTO. PAY. lol. Then mark a calendar or reminder for 10-11 months from now to call and cancel.
Post # 14
Creditkarma is AWESOME. I have boosted my score nearly 100 points since I’ve used it. It makes me hyper concious about my spending, debt and budget. My credit is now good enough to buy a house!
Post # 15
Being a very very new account, closing it ASAP is better then closing it right before interest kicks in because one of the factors that your credit score is based off of is the age of your credit history.
say you keep it for 11 months and then close it, the 11 months of “credit history” is closed and ruin the average age of your credit cards.