Snip Snip.. Closing Credit Card Accounts

[nenuco]

Hello Everyone!

Quick question regarding the closure of a credit card account. Apart from the possible AAoA hit your credit could take, are there any other disadavantages to closing accounts that no longer are being used? After opening an account how long is the minimum one should wait before closing it? How many accounts should one close at a time? I ask because I am at the point where my prefered creditors will not extend any further credit due to my total credit being so much higher than my income. I would appreciate any insight on this

Thanks in advance!

[DigitalArk]

I am interested in the answers as well.

[ForMyBiz]

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@nenuco wrote:

Hello Everyone!

Quick question regarding the closure of a credit card account. Apart from the possible AAoA hit your credit could take, are there any other disadavantages to closing accounts that no longer are being used? After opening an account how long is the minimum one should wait to close an account? How many accounts should one close at a time? I ask because I am at the point where my prefered creditors will not extend any further credit due to my total credit being so much higher than my income. I would appreciate any insight on this

Thanks!

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Have you checked out this thread?

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/td-p/347190

[nenuco]

Yes I saw that, thanks! I'm just wondering about the time frame in terms of opening an account and closing it as well as what may look good or bad beyond just the actual FICO score. For example:

Citi Garden Club - Opened 12/12/12: If the card no longer is of use to me should I wait 6 months, 12 months or 18 months before closing it down, without it waiving a red flag.

Barclaycard XY - Opened 12/12/12: Should this card be closed around the same time as the one above (if no longer interested) or is closing  2+ cards a negative sign to other lenders.

I hope that made sense. I have (3) cards I opened around the same time period, which are no longer of use. I would sock drawer them since they don't have AF, but lenders that are more important to me ie: Chase, Amex, Discover are not extending me credit due to my current total CL being so much higher than my income. Thanks!

[Dustink]

Closing accounts does not immediately lower your AAoA. It takes up to ten years for that to occur because the account will still remain on your report.

The primary effect is reduced total limit thus increasing utilization if you have other balances.

[SunriseEarth]

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@Dustink wrote:

Closing accounts does not immediately lower your AAoA. It takes up to ten years for that to occur because the account will still remain on your report.

The primary effect is reduced total limit thus increasing utilization if you have other balances.

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+1

[longtimelurker]

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@nenuco wrote:

Yes I saw that, thanks! I'm just wondering about the time frame in terms of opening an account and closing it as well as what may look good or bad beyond just the actual FICO score. For example:

Citi Garden Club - Opened 12/12/12: If the card no longer is of use to me should I wait 6 months, 12 months or 18 months before closing it down, without it waiving a red flag.

Barclaycard XY - Opened 12/12/12: Should this card be closed around the same time as the one above (if no longer interested) or is closing  2+ cards a negative sign to other lenders.

I hope that made sense. I have (3) cards I opened around the same time period, which are no longer of use. I would sock drawer them since they don't have AF, but lenders that are more important to me ie: Chase, Amex, Discover are not extending me credit due to my current total CL being so much higher than my income. Thanks!

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Generally, closing cards at any time is OK (too much worry about it here).   The exception, which doesn't seem to apply in your case, is if you appear to be churning cards just for the bonus, ie getting the card, spending the minimum to get the bonus, and then closing.  If you do this a few times with the same issuer, that issuer might decide you are not a valuable customer.

[BearsAndTurtlesRtheBest]

+1 My DS is in the process of closing Wells Fargo Platinum, Old Navy, and Chevron (basically worthless cards) She has already closen AE, anbd Macys and once you do you should feel like as if you lost weight from your wallet. Plus you can get better cards with great rewards. But really take in consider with the "churning accts". Good Luck!

[DaveSignal]

People who are churning know that they are churning.  It requires a very specific plan.  To do this, you don't get new cards because they fit your needs, you get them for the signup bonuses.  After you meet the min spend and receive the bonus, you spend the points and close the card before the annual fee is applied, only to open a different card with a new big signup bonus.  There is no way to do this accidentally, so I don't think OP needs to worry much.

[dollar_bill]

To the OP, i'm in a similar situation. I want to open some accounts with bigger limits, and close some older accounts that I used to build/rebuild a credit worthy status. I think it's a situation we have to manage ourselves, because credit profiles are a lot like snowflakes...they're all different.

I think you get to a point where you have an established history and enough available credit - it's ok to close a few accounts. At least I hope so My theory is at least partially correct so far, i'll let you know the how the rest turns out.

I want to get rid of the lesser cards and upgrade with prime cards...Timing has a lot to do with it if you're trying to do it quickly, at least that's my guess. If you have balances, it's tougher because in addtion to utlization you are fighting hard pulls. But once you get one domino to fall (a high limit), the rest should go in order.