Some accounts will carrry fees that people don't want to pay. Some of these fees are crazy for anyone to keep paying if the account is not being used. It doesn't cause harm to keep old accounts, only if they're being used and the bill is not being paid!
@Anonymous wrote:
Some accounts will carrry fees that people don't want to pay. Some of these fees are crazy for anyone to keep paying if the account is not being used. It doesn't cause harm to keep old accounts, only if they're being used and the bill is not being paid!
You said it! I had several cards from my rebuilding phase that had an AF of up to $79 on an average limit of about $300. No way I was going to keep paying these year after year just to hang on to them. I only have one left that has an AF and the only reason I kept it is because it was the oldest card I had in good standing and has a $3k limit. Once I get the final approval on my home loan the first thing I am going to do is tell them to take their AF and 30.99% interest rate and take a flying leap!
Its a lifestyle choice and circumstances that are specific to my situation that probably wouldn't work for many.
Credit age arguement doesn't apply to my situation:
If you don't go on CC apping sprees and only pick up an occasional card now and then and close another, you don't have any average age problems. As long as you keep one of your oldest cards, your credit length is kept. It takes at least 10 years for a closed card to fall off your accounts (I have a BofA that is taking 14yrs since they updated the account 4 years after it closed for unknown reasons). As long as it remains on your reports, it is used to calculate your average age. So by the time it falls, off, even your brand new card is 10 years old. If you don't get a lot of cards at any one time, you don't end up with the situation that a large part of your cards are new and dragging your age down and thus need a lot of other accounts to offset them.
Credit Utilization:
When I've noticed people here who have suddenly applied for several new cards, some have limits that are much lower then the others (say $7k instead of $10k). Banks don't like somone getting a lot of new credit and when they notice it, I don't think they give the best limit they could have. So if you pace yourself better, you can maximize your initial limits. I personaly have been able to get CLs of $10K or greater since '99 when I was 29. So a few cards go a long way. Since I spend a lot on CCs each month, I may sometimes go over 10% util, but its easy to get it back down the next month. And since I don't make impulse buying decisions involving loans (as I hate debt), its easy to keep it under before applying. I'd rather grow my current CLs with my current cards then get a card that serves no purpose other then getting my overall CL increased.
Not a CC Collector:
I don't want more then a few CCs to manage and I have never had more then 5 cards at any one time. In fact, when I use to have 800 scores a couple of years ago, I only had 2 opened CCs. I only get cards that serve a specifc purpose for me (and increasing Util isn't a good enough reason). I mostly get rewards cards that overlap nicely for my spending habits so that each one is regularly used. I've never cared if I lose a few points for using more then half my cards any month. I also may pick up the occasional store card to get a 10% off purchase and then never used it again so it normally closes (except maybe 1 is kept to play the score game if I need a few points for a loan). If I find a card has been replaced by another card in how I use them, that card will eventually get closed since it no longer fits in with my credit goals. However, since I don't get many new cards to begin with, I don't have to close cards very often either. I think the more cards you have to manage, the more likely you are to make a mistake and miss a payment. I couldn't imagine trying to keep track of 20 cards. To properly manage that many would take more time then I care to give.
In summary, it comes down to simplicity and ease of management. The main arguements against closing cards don't really apply in my situation. If I'm losing points, its very small. My current scores are being kept down by several 90+day lates from 2005 and not my credit mix or age. For the record, my credit length is 18.6 years and the average age is just under 10years even with a new card from last month. I don't feel like I'm being hurt.
I recently closed one with a relatively low limit when I found that it wasn't "eligible" for CLI's by request. I didn't need the limit or the reporting line, and it's one less thing to keep track of (14 open accounts left, 11 of which are CC's.)
And I'll close another relatively low-limit dud card in March, when its 30 goes over 2 years, just so I won't have to see the yellow square on my TC reports.
And I'll close another relatively low-limit dud card in March, when its 30 goes over 2 years, just so I won't have to see the yellow square on my TC reports.