Snip Snip.. Closing Credit Card Accounts

[longtimelurker]

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@DaveSignal wrote:

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.

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Nearly always true but I've seen a few cases of what appeared to issuers to be churning and was possibly not intended that way.  For example, it is reasonable for someone to get the CSP (because on myfico they say it's such a great card!) get the bonus, and come AF time, decide to downgrade.  They didn't get the card just for the bonus, they gave it a try and it didn't fit their needs/AF wasn't justified by the rewards.   Two years later they do a similar thing for similar "trying it out" reasons on another Chase card, one of the united cards say.   Some issuers, not necessarily Chase, may be hypersensitive to this and classify this as "signing up just for the bonuses" even if that wasn't the whole intent.

But yes, if you aren't deliberately churning, and not being careless in your card selections, not usually a worry!

[nenuco]

Thanks for all the replies! I was a little nervous about closing (3) accounts at the same time, but if I want higher limits on my primary cards I either have to find a new PT job or axe some less than stellar accounts.

Referring to some previous comments, I think churning cards is somewhat of a dangerous habit. There are many companies that are sensitive to this abuse, and may end up blackballing the user if repeated to an extent. I wouldn't dare to churn cards, especially with a lender I would like to keep in the distant future. That said everyone is different and what floats my boat may not float yours. Just row with caution

[parakleet]

While churning isn't for everyone - for one, you probably need to have excellent credit to do it without problems but I would hardly call it a "dangerous" habit. Obviously, it's not for everyone.

[nenuco]

This may sound a bit silly, but would it be ideal to ask for a CLI before closing an account? I ask since the account stays on your report for (10) years. I would assume that future lenders may rather see a closed card with a $5,000 limit rather than a one with a $2,500 limit. I may be totally wrong, so please let me know if you have any type of insight. Thanks!

[youngandcreditwrthy]

If anything, they'll view it favorably.
I closed 5 cards recently and gained two better ones. Impact on my score was only like 10-30 pts.

[takeshi74]

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@nenuco wrote:

After opening an account how long is the minimum one should wait before closing it? How many accounts should one close at a time? 

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There are no one-size-fits-all answers to these questions.

[TheConductor]

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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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This is 100% true, however I want to add a caveat.  Closing accounts has no immediate effect on your AAoA for FICO scoring purposes.

However, some of the FAKO scores used on credit monitoring sites (both free and paid) will react dramatically, because some of those scoring models consider only the AAoA of your open accounts.

It's really no big deal, because the FAKO scores have no effect on your actual ability to get approved for credit.  So if you close a bunch of accounts and see this happen, don't freak out.  Your FICO score will be fine, as long as the closed accounts haven't drastically shifted your utilization percentage.

An example: I took a double-digit FAKO hit on some sites for closing my $600 limit Credit One card.  Utilization impact was near-zero.  Effect on FICO scores: none.