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Established Member
urbex
Posts: 34
Registered: ‎06-25-2012

At what point do you cancel the secured card?

Been working on the rebuild process for about a year...have a $400 Cap1 secured card ($300 secured, $100 unsecured) opened a year ago, bought a truck about 6 months ago on a crap loan, and recently refi'ed it to a not so crap loan, have a Fingerhut account at $200 a month ago, zero lates on all accounts, and on a whim applied for a Cap1 unsecured card yesterday and got approved at $500 on their Cash card (I'm astounded, as they say the card is for those with excellent credit, which I know for a fact isn't me yet, lol).  Since I got approved for that card, I also applied for the Shell gas card, and got the 'we'll give you a decision within 30 days", which I assume will mean a denial letter in the mail in a couple weeks, lol.  I figure the reason I got approved with Cap1 has more to do with the year of history with them, not so much with improved credit. 

While I obviously still have a long way to go, and I have zero intentions of cancelling the secured card any time soon, I'm curious about when people decide to cancel the secured cards.  I'm a little concerned about the hit that my AAoA will take, and frankly I figure the cost of the annual fee with the Cap1 secured really isn't much to me.  This year they actually gave me an $18 credit without me even asking (only reason I even knew was that I saw it on the statement), so the AF ended up being $11.  To me that's a tiny amount to pay to continue to improve my credit.  I'm not hurting in any way by having the $300 tied up with them (in fact, I pretty much even forgot about it until last night). 

So, given that, do I wait until I can get a couple more cards, then cancel the secured?  Since it's not costing me much, do I just pocket the thing, charge a tank of gas on it occasionally to keep it active and reporting a positive for another few years until the AAoA hit will be minimal?  If I end up with a couple cards with considerably higher limits in the future, does this one low limit card bring down the score?

Regular Contributor
nma851
Posts: 145
Registered: ‎04-23-2013

Re: At what point do you cancel the secured card?

Hey Urbex -

Kinda reminds me of myself and I'll spare you the "story" :smileyhappy:

First, if you can live without that $300 as you mentioned already, and if it was me, I would keep it for the reasons you stated. While you might have CL/CLI issues - well I shouldn't say "issues" but rather lower your expectations, as when the lenders see lower CL's they more/less match that so to speak. Your scores may very well be better than you believe and/or the lenders see that too but they will also be seeing AAOA with relatively lower limits.

What I did with mine over time (about 3 years maybe??) was I kept depositing to increase the CL up to the max. Just recently, now that my main "issue" has been resolved, the unsecured I applied for and was approved for was a bit over half that amount as my initial CL.

Is it possible to do a CLI via more deposits? Even over time, we will say a year, bumping to $1,000 or more even, will let the lenders see you can handle it. They don't know its secured and all it will do is help. Once you have had an unsecured for about the same amount of time, then I would consider canceling - however with me personally, it can stay forever as far as I am concerned as it doesn't negatively affect me nor do I need that deposit back any time soon :smileyhappy: :smileyhappy:. It's really up to you but the longer the better for reasons you stated as well.

As for the Shell card you mentioned, you're probably going to want to take a breather on the apps. Lenders are going to see you applying for all these and will have to factor in the number of apps, the possibilities of which ones were approved, DTI ratios, util, etc etc.

Remember, if it is not used but available, too much can and will hurt depending on the circumstances. The one thing a lender does NOT want to see (besides the obvious late/CO's and all) are multiple combined high CL's that could essentially be "racked up", and then being denied on the basis of "too much available credit".

It's a delicate balance my friend. On a positive note as well, I certainly commend your efforts thus far and the results you're obtaining as a result. I'm happy for you and in fact impressed you took the bull by the horns and have done (and continue as well) whatever it takes to rebuild. You'll get there sooner than you realize!!

If you care to discuss more in-depth on anything in particular, feel free to ask away. We are all here to help as much as we can. If I personally do not know, there are MANY that do!!!

Take care,
NMA

C1 QS-REW: $4,000; C1 V-REW: $4,000; RING: $8,200; AZ REW: $3,000; FREEDOM: $3,400. SCORES: EX: 799; TU: 785, EQ: 790 - 09 JUL 14. STARTING: EX 635 TU 629 EQ 630 - 19 Oct 2012. GOAL: 800 ACROSS & IN THE GARDEN!
Community Leader
Valued Contributor
DaveSignal
Posts: 1,975
Registered: ‎07-29-2011

Re: At what point do you cancel the secured card?

I had a USAA secured card with $1000 CL and a USAA Rewards card with $3000 CL.  I called them to ask if I could just combine the limits to $4k on the Rewards card and possibly give my deposit back if possible.   They said it was not possible to do this.  So I told them to close the secured card and then, while still on the phone, asked for a CLI on the rewards card.  They approved me for $4500.  Go figure.  

EQ:701 TU:745 EX:694
Barclays Arrival $6.5k - BoA Travel Rewards $15k - SDFCU EMV $15k - NFCU goRewards $20k - CSP $5k - Amex ED $6.5k
Regular Contributor
nma851
Posts: 145
Registered: ‎04-23-2013

Re: At what point do you cancel the secured card?

Dave - did you open them at the same time or was the unsecured behind? I'm curious as I literally JUST got an unsecured (through cap one, $1,700) and I had that secured maxed at $3K.. I still have the secured, for AAoA reasons only, and am more/less in the same boat as the OP.

For the record, I'm also ok SSDI for the rest of my life (disability) so for me to go "high" would be wreckless/irresponsible of me. Hypothetically though, if I were to have the appropriate income, I'm kinda curious if the CL's would be progressive with income....

Just wondering given the OP and I are kinda identical to an extent & knowledge is power LOLOL :smileyhappy::smileyhappy::smileyhappy::smileyhappy:.

Thanks,
NMA

C1 QS-REW: $4,000; C1 V-REW: $4,000; RING: $8,200; AZ REW: $3,000; FREEDOM: $3,400. SCORES: EX: 799; TU: 785, EQ: 790 - 09 JUL 14. STARTING: EX 635 TU 629 EQ 630 - 19 Oct 2012. GOAL: 800 ACROSS & IN THE GARDEN!
Regular Contributor
nma851
Posts: 145
Registered: ‎04-23-2013

Re: At what point do you cancel the secured card?

Clarification - that "maxed" in RE: "I have that secured maxed at $3K" is the max CL, NOT the balance!!!! I'm at 100% avail ATM

Sorry about that!!!! Especially since I mentioned being irresponsible and wreck less in the next sentence HAHAHAHAHA!

C1 QS-REW: $4,000; C1 V-REW: $4,000; RING: $8,200; AZ REW: $3,000; FREEDOM: $3,400. SCORES: EX: 799; TU: 785, EQ: 790 - 09 JUL 14. STARTING: EX 635 TU 629 EQ 630 - 19 Oct 2012. GOAL: 800 ACROSS & IN THE GARDEN!
Community Leader
Valued Contributor
DaveSignal
Posts: 1,975
Registered: ‎07-29-2011

Re: At what point do you cancel the secured card?


nma851 wrote:
Dave - did you open them at the same time or was the unsecured behind? I'm curious as I literally JUST got an unsecured (through cap one, $1,700) and I had that secured maxed at $3K.. I still have the secured, for AAoA reasons only, and am more/less in the same boat as the OP.


 

I started rebuilding with a USAA secured ($1000).  I used that for about 4 months and then applied for USAA Rewards.  Kept both for about 7 to 8 months, but ended up closing secured (as I mentioned in an earlier post) before the annual fee.

 

Closing your secured card won't have any effect on your AAoA.

EQ:701 TU:745 EX:694
Barclays Arrival $6.5k - BoA Travel Rewards $15k - SDFCU EMV $15k - NFCU goRewards $20k - CSP $5k - Amex ED $6.5k
Regular Contributor
nma851
Posts: 145
Registered: ‎04-23-2013

Re: At what point do you cancel the secured card?

Thanks for commenting so quickly :smileyhappy:. I have been under another misconception for some time. It was my understanding that, while some do not have to even report to begin with, once you close it, eventually it is going to fall off. I have seen this with several of my paid/closed accounts just vanish one day, all of which were quite old (10+ years if not 15 easily).

That being said, and since there no longer exists any "old" accounts, I believe the OP and myself both would then have "new" AAoA's in about 10-15 years if they happen to drop off, as evidenced by my old, paid/closed accts did in my case.

Dont take this the wrong way at all I mean no offense nor "challenge" here :smileyhappy::smileyhappy::smileyhappy:. Either I am misunderstanding a few things or I've misspoken in the sense that AAoA will not be affected UNLESS the acct should fall off the CR's causing a new "first account opening date" to occur. Of course, for purposes of this scenario, we'll just say there is just this one account (secured one) closure as being the oldest just to try & make it easier. My apologies again for bothering!!

C1 QS-REW: $4,000; C1 V-REW: $4,000; RING: $8,200; AZ REW: $3,000; FREEDOM: $3,400. SCORES: EX: 799; TU: 785, EQ: 790 - 09 JUL 14. STARTING: EX 635 TU 629 EQ 630 - 19 Oct 2012. GOAL: 800 ACROSS & IN THE GARDEN!
Regular Contributor
nma851
Posts: 145
Registered: ‎04-23-2013

Re: At what point do you cancel the secured card?

I guess it is kinda moot though given by that time, we would have established all that unsecured history for aging..... It all works out in the end right?? :smileyhappy::smileyhappy::smileyhappy:

C1 QS-REW: $4,000; C1 V-REW: $4,000; RING: $8,200; AZ REW: $3,000; FREEDOM: $3,400. SCORES: EX: 799; TU: 785, EQ: 790 - 09 JUL 14. STARTING: EX 635 TU 629 EQ 630 - 19 Oct 2012. GOAL: 800 ACROSS & IN THE GARDEN!
Community Leader
Valued Contributor
DaveSignal
Posts: 1,975
Registered: ‎07-29-2011

Re: At what point do you cancel the secured card?

Closed accounts stay on the report for 10 years.  During this time, they still contribute to AAoA.

 

Most people have more than a few different aging accounts over a 10 year span of time that make the effect of a 10-year old account falling off pretty negligible.

EQ:701 TU:745 EX:694
Barclays Arrival $6.5k - BoA Travel Rewards $15k - SDFCU EMV $15k - NFCU goRewards $20k - CSP $5k - Amex ED $6.5k

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