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Asking advise on closing a secured card

Established Member

Asking advise on closing a secured card

I have a Cap1 secured card that i got as part of the Rebuilding Credit program. I secured it with $300 cash. This card was opened 8/2015. The card has been a good help in rebuilding my credit.

Since opening it, my credit report has improved drastically. It's gone from FAKO 535 to 735. I dont know what the actual FICO was back in '15 but I dont think it was higher. Current FICO has me at Eq 669 TU 674 AND EX 671.

I am considering closing it as I think i have too many cards. Current cards are:
Cap1 Plat (secured $1350 CL)
Cap1 QS (unsecured $2250 CL)
Walmart Synchrony MC (unsecured $700 CL)
Chase Amazon Prime (unsecured $3000 CL)
Cap1 QS (unsecured $1000 CL)

Ive pro/conned it but thinking i may have missed something.

Pro: helping avg age of credit. $1350 CL. No AF

CON: $300 cash tied up that can be used elsewhere. Will be unused and potentially closed by cap1 in future. Closing shortens avg age of credit

I know conventional wisdom says keep it open as theres no monthly fees. But same wisdom also says dont tie up the cash!

Closing it only shortens my avg age by 6 months out of 19.

What advise does anyone have to offer?
4 REPLIES
Community Leader
Senior Contributor

Re: Asking advise on closing a secured card

Closing it will not shorten your AAoA.  So you can take that factor out of your decision making process.  Only when the closed account drops off your report (ten years from now) will it have an effect, and by then your AAoA will presumably be a lot higher.

 

Is it your oldest open account?  If so, when was your next oldest credit card opened?

 

If you close it and lose that part of your total credit limit, will your CL still be big enough that you can easily have a very low utilization?  (1-8%)

 

You mention that one reason you are thinking about closing it is "I think i have too many cards."  Can you tell us more what that means for you?  Why would five cards be too many?

 

Are you in a financial crunch where you need the $300?

 

Does Cap One offer any possible way to "graduate" the card to an unesecured line in another year and/or with better scores?  If not, would Cap One let you transfer some or all of the CL to your other Cap One card before you close it?

Established Member

Re: Asking advise on closing a secured card



Is it your oldest open account? If so, when was your next oldest credit card opened? Yes oldest account at 19 months. Next oldest is 13 months. 

If you close it and lose that part of your total credit limit, will your CL still be big enough that you can easily have a very low utilization? (1-8%) yes. I don't carry balances and my usage is about 3%, I don't use the card more than i have extra cash during the month. Never over extend 

You mention that one reason you are thinking about closing it is "I think i have too many cards." Can you tell us more what that means for you? Why would five cards be too many?  Mostly due to temptation. I have a good lock on telling myself NO when I see something pricey I want. Its tougher when I have a card with 0 balance and it's so simple to just swipe to get it...lol. 

Are you in a financial crunch where you need the $300? not at this time per say but my emetgency funds can always be higher. It's a bit low at the moment. Been trying to bolster it just in case 

Does Cap One offer any possible way to "graduate" the card to an unesecured line in another year and/or with better scores? If not, would Cap One let you transfer some or all of the CL to your other Cap One card before you close it? cap1 wont let me combine or PC at this time. Tried that 3 days ago. As it's a rebuilding card, it isn't eligible for upgrading at this time. Can't do anything til it becomes unsecured and the rep couldn't tell me when/if that would happen

Highlighted
Regular Contributor

Re: Asking advise on closing a secured card

My advice: if you need the $300 now then close. If you can wait, then wait.
Community Leader
Senior Contributor

Re: Asking advise on closing a secured card

Given your answers to the questions I asked, closing is the right choice.  If the account was way older than the next oldest, that would be a reason to keep it open -- but it's not.  (Has to do with a scoring effect that would materialize ten years from now.)

 

I found especially compelling the concerns about perceived spending risk and the desire to increase your emergency fund.

 

There's never a right or wrong answer to these things.  It's really the process of asking yourself all these questions that is the important thing.

 

Best wishes...