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JoDiver
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Registered: ‎12-01-2009
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Keeping AMEX Credit Card Accounts Open

Hi,

I am aware that it's best to keep credit card accounts open rather than close them when you have paid them down to a zero balance.  I know that keeping them open demonstrates to the credit reporting agencies that you have access to a particular level of credit. However, how does this apply in the case of American Express Gold Cards which (theoretically!) don't have a credit limit. How do the agencies determine how much credit you have available on these cards and are there the same advantages in regard to your credit score in keeping one of these cards open, compared with others like VISA and MC?

Thanks

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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Keeping AMEX Credit Card Accounts Open

These cards are not counted in your total CL and total util(ization), except for on the older model of the TU FICO score. So they have no effect this way.

They do get points for being an open tradeline. And every month that you add clean history on the account, it is a positive factor for your scores.

One thing to consider is whether to sock-drawer a CC (tuck a card away and ignore it) if it has an annual fee. I sure wouldn't want to pay $150 or $135 or whatever it is this phase of the moon for a Gold card that I wasn't using.

I had a Gold with first-year fee waived, and I closed it at 11 1/2 months and opened a Blue, which is a revolving credit card instead of a pay-monthly charge card like the Gold. In this manner, I dodged the fee, and I picked up additional total available credit. And the Blue kept the year in which the Gold was opened, plus the month in which the Blue was opened, so I ducked the new account ding, which was very handy.

This might be something that you could consider, especially if the Gold card is pretty old.

Otherwise, put a small recurring charge on your Gold --cellphone, charitable donation, etc. The card will get used monthly and can still nestle in the sock drawer. Just remember to pay the bill on whatever you use, but this time, you'll be paying AmEx instead of the cell phone company, charity, or whatever.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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LizF
Posts: 28
Registered: ‎01-15-2010
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Re: Keeping AMEX Credit Card Accounts Open


haulingthescoreup wrote:

I had a Gold with first-year fee waived, and I closed it at 11 1/2 months and opened a Blue, which is a revolving credit card instead of a pay-monthly charge card like the Gold. In this manner, I dodged the fee, and I picked up additional total available credit. And the Blue kept the year in which the Gold was opened, plus the month in which the Blue was opened, so I ducked the new account ding, which was very handy.
Sorry, the product change from Gold to Blue preserves the year of the original account, but the date of the new one?  I'm curious about this as I am considering attempting the same 6-8 months in with my Green card that I just accepted...it sounds odd.
 In either case, it still shows up as the same account on your CR, right?  Same history, new #? 

 


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haulingthescoreup
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Re: Keeping AMEX Credit Card Accounts Open

[ Edited ]
It's not actually a product change. You can only PC AmEx products that are in the same category --charge card to charge card; credit card to credit card.

What I did was close the Gold and then app for the Blue.

The way that American Express works it, a new CC will display the YEAR of your original membership (the year that appears on your oldest card), but the MONTH of your actual application for the new card.

So I got my Gold in March 2008, and that's the date that appears on the card. (This was my first personal account with AmEx.) I got my Blue in February 2009. The date that appears on it is February 2008 --month of actual application + year of "member since." My Blue thus shows as being a year older than the Gold, which I find humorous.

This is just what is on the cards, and what's reported to the CRA's, though. AmEx knows perfectly well when each card was opened.

This quirk is wonderful if your "member since" date is older than your AAoA (average age of accounts.) Opening up a new card (or two, or more) will actually increase your AAoA, because they will report as having been open longer than your average, thus increasing it.

Even if your "member since" date is relatively new, if it's from a year or more ago, and you pay attention to the month that you open it, you will escape the new account ding, since it will have instant age. You will get a hard inq though, as you are applying for new credit.

So hint: don't open an American Express account in November or December. Wait until January, and make this reporting date feature work for you. :smileywink:


edited to untangle some confusion, doubtless leaving a lot more behind
Message Edited by haulingthescoreup on 01-19-2010 08:01 PM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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LizF
Posts: 28
Registered: ‎01-15-2010
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Re: Keeping AMEX Credit Card Accounts Open

That is a pretty nifty feature!

 

I think I'll end up having to pay the annual fee on the Green if I wait until next Jan, since I just accepted the prequalified offer for the Green card last week.  (Haven't even gotten the card yet, & I'm trying to find some way to get rid of it!)

 

I have heard great things about AmEx's affect on scores & credit profile, so I went for it...I figure it's easier to accept a prequal offer & then switch than it is to pass on the prequal offer & try from scratch for a different product...hopefully I'm not wrong in that belief or I just wasted $95.

 

Will closing the Green after only a year ding my FICOs? 


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