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01-01-2013 07:39 PM - edited 01-01-2013 07:42 PM
Keeping it open or closing has no impact (for probably the next several years) on AAoA. Only impacts utilization.
If there are no rewards or other value to the card, there is no real point in keeping it till next year to see if the fee will be waived. If you really don't need it, may as well close it and move on.
BS, you are correct in that AAoA has no impact currently, but in the future it could mean a quite a bit depending on his/her credit profile. I have $65k in available credit to me and Cap 1 would not budge on the fee or CL so I dumped them at the 1 year mark. At the time it helped established that I was using my credit effectively. When reconning with Chase they asked me why I had the card for only a year and closed it, so an UW may see opening cards and then closing them quickly as risky (people do this often to just get the bonuses). As always YMMV.
Right, but your experience shows that even if it is kept for a year, it may not help! (The options after a year are to succeed in getting the annual fee waived, to pay the annual fee, or to close the card then and then later a UW may ask your question.)
I think people are overly scared of UW questions, that's their job, and not every question is make-or-break, but as you say, YMMV. At my last mortgage refinancing, two days before closing the underwriter came up with a long list of questions, which was certainly a pain but a lot of it seemed mechanical. "Your CR shows three inqs in the last three months. Describe what they are and whether they led to new credit lines". I had to answer one "No idea what that is." (which was true) and that answer was apparently perfectly acceptable. The others (involving matching money flow via international wires from bank account to bank account) were more challenging but not common I would think.
I agree with your assertion BS; however, I'd point out that mortgage refinancing and the UW there is an entirely different animal than the UW and approval process for any credit card.
Mortgage refinancing is the cash cow of loan origination for banks these days, and while the process is by design (and even mandate) tedious, the due diligence is just that, innocent until proven guilty so to speak.
CC approvals, not nearly so happy where even a single thing can toss you into another bucket and potentially out of the approval range on whatever internal metric they use. I think this goes well beyond the fact that mortgages are secured loans, whereas credit cards are typically unsecured.
I also think the conversation might not have been quite as rosy had it been one month without a reasonable explanation, instead of the one year with a reasonable or even good one.
01-01-2013 07:47 PM
I closed both of my cap ones. One at yr mark and other a few months after that. No one has ever asked me why I closed them. And if they did, I would just tell them the truth - tactfully, of course.
01-01-2013 09:30 PM
I got this Cap One cash card on Thanksgiving in my spree. The card only has a 500 limit, the lowest of all my cards. Since they are terrible with cli and I always pif and dont need it for utilization, and it has a 39 dollar AF............ Why do I keep it ???
I guess it depends on what you got the card for, I had this same card this last winter it gave me a solid 2% cash back however the low CL really stunk and when my Banko fell off my credit reports Last Feb and I opened my AmEx BCE card that same month I closed the cap one card as well as the HSBC card both of them had 500 CL. So if your credit score is about 720 I would say go for it and get a card that is better suited to your spending habits.
01-01-2013 10:55 PM
Keep it to help build AAoA, and next October ask them to remove the fee or waive it. If you do not need it at that point and they don't waive the fee then cancel.
Completely agree with this recommendation.
01-02-2013 12:13 AM
Why did you close them?
They wouldn't CLI.
01-02-2013 12:20 AM
Why did you close them?
They wouldn't CLI.
Yup I feel you on this. I kept mines open until CLI and AF not being waived anymore
01-02-2013 05:45 AM
I just figure that if you opened the account and took the inquiry, why not keep it open for a year, show good payment history, and then let it go if you can't get a CLI or AF waived? I have always associated opening an account and closing it within a month or two as not looking very favorable to other lenders. I just don't want to have to explain it if asked, so I sock drawer the card until the year is up and close it out.