Can closing this credit card account affect my credit score?

[Anonymous]

Hi,

 My credit card history is about 9 months old.  I have 2 credit cards, one with capital one and the other with discover.  The Capone credit limit is $2,500 and discover is $1,900.  I have been making on-time payments on both accounts without any late payments; in addition, I have been paying more than the minimum due each month.  My credit utilization is currently about 20%. The credit limit on both accounts were increased to the amounts above since I was making on-time payments.  I checked my score on discover yesterday and it was showing 665 as my FICO score.  My goal is to eventually hit the 750 mark.    Both credit cards have a 22.99% APR.

I received a pre-approved credit card offer from PNC bank yesterday (called the PNC points visa card), which offers a 14.24% APR.  The APR seems very attractive compared to the cards I have now.  I was thinking of getting the PNC card and then closing the Discover card since the pnc card would offer a lower APR.  First, I am not sure if it's a good idea to get the PNC card in the first place, as I am not sure if they will give me a credit limit that is comparable to the limits I have now with capone or discover.  Also, I am not sure if a 14.24% APR is any good.

Do you think I should not apply to the pnc card right now and just wait it out until I get the score above 700 before I apply to a lower APR credit card?  My desire is to eventually close out both the high APR cards I have now and replace them with lower APR cards, but I have been reading online that it is not wise to close credit cards that have a long credit history of on-time payments, as this would harm the FICO credit score.  This is why I want to close out one of my cards now instead of waiting for some time.  What do you guys think? Should I go for the pnc card now and close out the discover card?  I want to close out the discover card as it has the lower limit.

Any advice would be greatly appreciated.

Thanks.

[Appleman]

Hello and welcome to myFICO forums,

If you do apply for another CC, do not close any of your old cards. Having three cards will not hurt your score and closing one on a new file could decrease your score. As you are carrying a balance your total available credit would decrease and hurt your score.

Are you currently using a budget? If not, I would recommend setting up a budget so you do not create new debt. 

You are on the right path for improving your score:

1. Pay early or on-time (never late)

2. Reduce the amount you owe. Dropping the utilization will help. Ideally you want one credit card to report a balance below 10% on one card. And certainly pay in full once you do pay off your credit cards. (Many of us on myFICO pay off our purchases before the statement cuts)

3. A new card will have a mixxed effect on your score. New inquiry and new account will likely drop your score some. Adding additional available credit will help the score.

I am sure others will chime in to give their thoughts on your situation.

Good luck

[NRB525]

Don't close either the Capital One or the Discover Card. The Discover card, don't close ever. Which Capital One card do you have?

If you don't like the 23% APR, then you need to pay down the amounts. What are the balances you are carrying on each card? Is there a reason you are not paying them off?

If there are no lates ever in your file, then your scores are being held down by the balances you are carrying. To get to 700 then 750 faster, paying down the balances is your best course of action. Get to the point where you are not paying interest, then pay in full to avoid interest costs. After that, only time will get you to 750.

I don't know about PNC bank, so can't make a direct recommendation, but I'd not close the CapOne or Discover. The PNC may be a nice addition, the third card will be helpful in the long run for your score, but likely not much help initially.

[Anonymous]

Hi, 

Thanks for the replies.  I have the Capital One Platinum Mastercard and the Discorer It card.  The balance on the Capone card is currently about $250 and $600 on the Discover card.  I transfered $600 from capone to discover since discover offered a 0% APR for 12 months on the transfered amount.  I am not going to use the Discover card for any purchases what so ever while I pay down the transfer balance on that card. I am going to pay off the transfered amount quickly and will pay off the Capone card soon also.  After that, I am planning on paying the statement balances in full going forward.

thanks. 

[NRB525]

Ok, good plan. You've found the BT offers on Discover, even better. There are probably two sets of BT offers, one with a 3% fee for 0% APR, another with no BT Fee, and a low APR.

The way you should look at that is, you have the ability to use the Discover for the rewards, no-fee BT to the Capital One, and a low APR on the Discover. So if there is any large-ish purchase you want to carry for a few months, charge it on the Discover, after it posts, BT it to the Capital One, let it sit on the Capital One for a few days, then use the no-fee low APR to move the balance back to Discover. This will trigger interest on new charges on the Discover, but that balance will be at a low APR.

And you can also contact Capital One to see if your Platinum card can be PC to a Quicksilver with no annual fee, and 1.5% rewards everywhere.

So I hope it is becoming clear why I would NEVER close either of these cards

[Anonymous]

NBR525, thanks for the great tips! I'll keep them in mind. I never knew I could PC a credit card. Thanks again.