Closing cards, what's the point?

[ktl72455]

I just closed one of my beging builder cards Matrix 400.00 CL  26% they charged 75.00 anual fee and started doing the 12.00 a month fee to have it.   My rebuild is done where they are no longer helpful. I got a 1000.00 CL increase which off set the 400.00 limit I would loose by closeing them so it only made sence to close the card and let the positive report for the next 10 yrs.

[Anonymous]

While the two most common answers are (a) to avoid an upcoming annual fee and (b) to get the full year's payment history, there are a few others. I think acconts stop being "new" after a year, and people generally think it looks better if you don't close new accounts. There is also the possibility that people review their accounts annually and decide whether to keep or lose the cards then.

[takeshi74]

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@Anonymous wrote:
I've noticed people close cards at certain year marks. Is there a real reason for this?

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Aside from avoiding AF's it's generally assumption.  It is assumed that closing in X timeframe looks better than closing in a shorter timeframe.

Always consdier your sources.  People have varying reasosn why they do or do not close cards.  It's up to you to use reasons that are relevant to you.  The known objective information is in the Closing Credit Cards thread linked in the Helpful Threads sticky.  Use that info along with however you evaulate the subjective matters relevant to you to reach your decision.

[Thomas_Thumb]

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@Anonymous wrote:
I've noticed people close cards at certain year marks. Is there a real reason for this?

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In general, it is helpful to keep a card open even if you don't use it as long as there is no annual fee. Even if the account is inactive you build account age without facing the 10 year deletion mark associated with closed accounts. If you do open an account and decide to close it, one reason to not close it right away is to gain monthly "paid as agreed" history. Months of no charge/no payment are classed as "paid as agreed" or "ok" by default.

It usually has value to show at least a 24 month payment history on a card before closing it [unless there were a few lates]. The CRA reports vary on how many months of payment history each one lists (EQ shows 81 months, EX shows 24 months and TransUnion 72 months on my CB reports).

A few reasons for closing an account (outside of the AF) include:

1) Notification of a change in terms (such as selling your info to 3rd parties). I closed a high credit limit CC because of this change in terms.

2) You have a couple low CL cards you do not use. Closing the cards can then increase your average CL per open account which is a factor in credit based insurance scoring (CBIS). A substantial increase in average CL may shift you to a higher score tier and that could translate to reduced insurance premiums.

3) Payment history for the card has some negatives and you want to attempt to get the card issuer to delete the account with the CRAs. Card must be closed to do so. Cap One removed a store card account with the CRAs at 6 years after closure - well before the 10 year rule.

4) A card not used is a card lost and possibly fraudulently used. Close account to eliminate risk.

Outside of AFs or perhaps establishing a certain length of payment history, not sure why closures would correlate to time intervals.

[Anonymous]

I have rebuilder cards that are no longer useful, and going away soon.  Both stuck at $400 (Walmart) and $1000 (Care Credit).  The one store card I'd like to keep (Amazon) is staying around, along with the bank cards (Freedom and Discover) and will apply for 1-2 more when my profile/score/income supports it.