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Credit cards exit strategies

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Anonymous
Not applicable

Credit cards exit strategies

In short: I have too many credit cards and I would like to understand how to best cancel some of these cards and hurt my credit least?

 

Full story: when I first came to the states from Canada, even though I had excellent credit score back there I wasn't able to get any decent credit cards in the US. After a few attempts I decided to just stop trying. I was paying home mortgage in the US and thought that it would help my credits. Turns out it went much more slowly than I expected.

 

So after a while I got a Capital One QuickSilver mastercard that only requires good credit but has a annual fee. I got very little credit limit at first but I was able to use it to build my credit. I had always plan to cancel it after a while and my credit limit has increased quite a bit since. Also I was able to get a Amex from Costco.

I have just gotten a big credit increase from Capital One QuickSilver recently. Turns out my credit has climbed up enough to apply to other cards. I thought I would just get the Venture card with 2% travel points and $60 annual fee. I have gotten approved with a uncomfortably large credit limit. Before I even receive the card I found out about the citi double points card. It's also 2% but no annual fee and I don't have to just use it on travel. That makes it even a better choice to me and I instantly regret applying for the Venture. I applied for the citi card and got a decent credit limit. Much less than the Venture but still planty for me.

 

So now I have 4 credit cards. That's too many. I would like to get rid of some of them smartly. This is why I thought I would ask for suggestions:

 

1. QuickSilver - This one I definitely want to get rid of. It has annual fee and after I getting the citi card it would be useless. My concern is that this being the longest credit line, it would have a bad impact on my score.

2. Costco Amex - As long as I am shopping at Costco I would keep this card for its excellent cash backs. However I heard that Costco and Amex are breaking up. If this card continue to have annual fee and has no cashback from costco I would have no use for it. If I cancel it along with QuickSilver my credit history would definitely suffer
3. Venture - If I could, I would totally just undo applying it. But the damage is already done I was thinking I might as well use it a little and spend the signing bonus before canceling it.
4. Citi double points - This one I would definitely keep. Being a no fee card there is no risk. Even if I end up having to keep all other card there's really no harm in keeping it.

 

So my plan was to cancel QuickSilver in December before the annual fee is due. Use Venture for a while to get it's signing bonus and use it. Ideally before next May before I need to pay annual fee.

 

How much would this hurt my credit score? Would it be worth it at all to keep these fee card for a little longer just to make sure my credit don't get hurt? Hypethetically if I take on another mortgage do I have to worry that I would get worse interest rate?

Message 1 of 14
13 REPLIES 13
SouthJamaica
Mega Contributor

Re: Credit cards exit strategies

IMHO you should hold on to all the cards.

 

If you're uncomfortable, then don't use them.

 

Keep 3 in a sock drawer.

 

Then every month or two alternate which one is in use.

 

Keep them at zero balance.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 2 of 14
cashnocredit
Valued Contributor

Re: Credit cards exit strategies


@Anonymous wrote:

In short: I have too many credit cards and I would like to understand how to best cancel some of these cards and hurt my credit least?

 

Full story: when I first came to the states from Canada, even though I had excellent credit score back there I wasn't able to get any decent credit cards in the US. After a few attempts I decided to just stop trying. I was paying home mortgage in the US and thought that it would help my credits. Turns out it went much more slowly than I expected.

 

So after a while I got a Capital One QuickSilver mastercard that only requires good credit but has a annual fee. I got very little credit limit at first but I was able to use it to build my credit. I had always plan to cancel it after a while and my credit limit has increased quite a bit since. Also I was able to get a Amex from Costco.

I have just gotten a big credit increase from Capital One QuickSilver recently. Turns out my credit has climbed up enough to apply to other cards. I thought I would just get the Venture card with 2% travel points and $60 annual fee. I have gotten approved with a uncomfortably large credit limit. Before I even receive the card I found out about the citi double points card. It's also 2% but no annual fee and I don't have to just use it on travel. That makes it even a better choice to me and I instantly regret applying for the Venture. I applied for the citi card and got a decent credit limit. Much less than the Venture but still planty for me.

 

So now I have 4 credit cards. That's too many. I would like to get rid of some of them smartly. This is why I thought I would ask for suggestions:

 

1. QuickSilver - This one I definitely want to get rid of. It has annual fee and after I getting the citi card it would be useless. My concern is that this being the longest credit line, it would have a bad impact on my score.

2. Costco Amex - As long as I am shopping at Costco I would keep this card for its excellent cash backs. However I heard that Costco and Amex are breaking up. If this card continue to have annual fee and has no cashback from costco I would have no use for it. If I cancel it along with QuickSilver my credit history would definitely suffer
3. Venture - If I could, I would totally just undo applying it. But the damage is already done I was thinking I might as well use it a little and spend the signing bonus before canceling it.
4. Citi double points - This one I would definitely keep. Being a no fee card there is no risk. Even if I end up having to keep all other card there's really no harm in keeping it.

 

So my plan was to cancel QuickSilver in December before the annual fee is due. Use Venture for a while to get it's signing bonus and use it. Ideally before next May before I need to pay annual fee.

 

How much would this hurt my credit score? Would it be worth it at all to keep these fee card for a little longer just to make sure my credit don't get hurt? Hypethetically if I take on another mortgage do I have to worry that I would get worse interest rate?


If you shop at Costco don't close the True Earnings card. Citi is buying the Costco Amex account portfolio and there is a good chance the card will transfer seamlessly to Citi with Citi issuing a new Visa with your pic and similar, possibly better, rewards. The account may even keep the history though we won't know until shortly before the transition nex Apr. The rewards comes out in Feb so at least wait til then so you get your rewards and close it or not based on how the final deal plays out. The Amex Costco card is actually a no-fee card. They just roll the Costco fee into it.

 

4 cards really isn't too many. Up to 5 cards helps credit scores but the effect after 3 is minor. I have 5 and just put them on autopay. I use them for different things and like the diversity and backup in case one bank or another has a problem. You never know when a fraud alert might happen from pure coincidence because there are lots of card fraudsters. Banks will shut down accounts and issue new cards and the first you know of it is a decline or new card showing up in the mail.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 3 of 14
Anonymous
Not applicable

Re: Credit cards exit strategies

Thanks SouthJamaica and cashnocredit


Unless I was given a compelling reason I was hoping to only keep no fee cards (like the citi double reward) or cards I would actually use (like Amex Ture earnings). Unless there are significatint downside or potential risk that I am not aware of (the reason I came here and ask the experts) I would rather take a hit in my credit score and take another year to build it back up.

 

Like for example would cancelling a card with such big credit limit like Venture cause hard to repaire damage to my credit history? Or would canceling right after using the signing bonus and canceling within 1 year relfect permanately on my credit history. These things I have no idea about.

Message 4 of 14
jamie123
Valued Contributor

Re: Credit cards exit strategies

1. You need a minimum of 3 credit cards to be able to acheive the highest scores. There are a couple of FICO calculations that won't ever work in your favor with less than 3 cards.

 

2. Yes, it could take you a while to replace the Venture CL but it will eventually happen.

 

Listen...

 

You really do want to have 5 to 8 quallity credit cards that you can keep open for life. Credit cards are the foundation of high and rock solid credit scores. Most people can't keep a mortgage open for 20 years but almost everyone should easily be able to keep a credit card open for 20 years.

 

I would suggest keeping the cards that you don't want to use in your sock drawer. Pull them out once every 3 or 4 months and use them for a purchase. Put them back in the sock drawer for another 3 or 4 months.

 

You went through all the damage to get these cards so you should keep them open so you can reap the awards now.

 

You need to make sure that you really want a card before apping for it. You should slowly replace the cards that you don't like by getting 1 good card per year and closing 1 card that you don't like each year but not until your new card is 2 years old.

 

Make sure you only app for cards that don't have an annual fee and it makes it easy to keep them open for life.


Starting Score: EQ 653 6/21/12
Current Score: EQ 817 3/10/20 - EX 820 3/13/20 - TU 825 3/03/20
Message 5 of 14
CreditDunce
Valued Contributor

Re: Credit cards exit strategies

Why not ask CapitalOne to permanently wave the AF on the QS1?  If it is your oldest account, it seems a shame to close the trade line.   Once the QS1 doesn't have an annual fee, you can just use the card as a backup to your Citi DoubleCash or if you are traveling internationally.   I don't think Cap1 is very aggressive about closing inactive accounts, but to be sure they don't close the account you might want to use it for one small charge once every 6-12 months.

 

The high credit line on the Venture is probably helping stabilize your credit score. The high credit limit helps smooth out your monthly fluctuations in your utilization.   But if you are not using much of your available revolving credit, canceling the Venture will have a minimum short term effect on your credit.   A closed account will probably stay on your account for about 10 years.    While lenders don't like to see you churn their cards, it will not hurt your score very much to close it.

 

I recommend you keep at least 3 credit cards open. You don't have to.  But it will help you maximize your credit score.

Message 6 of 14
Anonymous
Not applicable

Re: Credit cards exit strategies

Thanks Jamie.

 

Also,

 

I was thinking that I would miss the no foreign transaction fee feature of the Capital One card if I were to cancel it. Is it a common thing for them to do? How long would I have to keep this card for them to possibly agree to this request? Or could I use my recent approval of Venture as a reason to ask for the wavier? If I can keep my QuickSilver even if I cancel Venture in a year I could still make the 3 cards minimum that everyone is suggesting me to keep.

 

(Also, you mentioned closed account. This make me remember when I first open a wells fargo bank account (2.5 years ago) they offer to give me a line of credit with no fees. When I received a credit card with $35 annual fee I was so upset for them to send me the wrong product I cancel the account right away. That may have been a mistake which will stick with me for 10 years. Hopefully not to a big affect. )

 

Message 7 of 14
NRB525
Super Contributor

Re: Credit cards exit strategies

OP it seems you have reached the limit of the number of cards you are comfortable carrying. That is a first step in really understanding what you want from cards.

It also sounds like you got to this way of thinking only recently. Two relatively quick apps for Venture and Double Cash means you were shopping pretty fast for cards.

 

The best thing to do now is... nothing for several months. You don't have any annual fees right away, you have the Venture spend you can get through to make the sign up bonus, and with anything credit or credit card related, you want to take your time in making any decisions.

 

Each of your cards also has either unknowns, or disadvantages you need to factor into your decision for 2016 (I would not make any choices about closing any of these cards in 2015, that is too soon).

 

The Double Cash has FTF, the Costco AMEX is unknown as to how Citi and AMEX are going to specifically deal with the transition of Costco membership, the Venture could be converted to a regular Quicksilver at some point, and has no FTF for either card, so if you are travelling, that's worth something. Also, CapitalOne cards tend to be bulletproof, whereas Citi and even AMEX can get cold feet for strange reasons. Having three CCC to work with is an advantage in certain cases.

 

The one action you should take now is to ask Capital One to convert your QS1 to no annual fee. That way, you are able to take some action without deciding on closure.

 

And if you do decide to close accounts, don't worry about it. I have two closed accounts I'm paying balances on, I have two others I closed after opening the accounts last year, there are several others in the last few years which were closed. It has no negative consequences for your credit file.

 

But to repeat: I would not make any choices about any possible closure ( and I probably would not close any of the cards you have already) until 2016 at the earliest.

 

Good luck!

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 8 of 14
CreditDunce
Valued Contributor

Re: Credit cards exit strategies

Actually, your WF card you canceled is probably a positive account for you right now.  Since it is older than 2 years old and is above the average age of your accounts, on balance it is a positive trade line.  The main negatives of a closed account is it no longer helps your utilization (FICO likes low, but not zero utilization) and it will be deleted from your credit report in 10 years (maybe less).   In 10 years when they delete the account from your credit report, it may hurt your score a little.    By the way, Line Of Credit (LOC) are normally a different products than credit cards.  It is possible WF gave you a LOC (no AF) and a credit card (with AF).   If you do have an unused LOC, it would count as one of your minimum three revolving trade lines.  However, I would still recommend you keep at least three open credit cards.

 

I think Cap1 will be willing to waive the AF on the QS1 since you have had the account for a while with a good payment history.   However, I have never had a Cap1 account and cannot offer personal experience.   You might want to search the forums for post on people who have had the AF fee waived.  There are many post on the topic.  Some seem to have have had the fee waived easily others had to escalate to get the fee waived.   In the various post it may be called a product change or PC for short.

 

Also, while you didn't ask about it, you may want to think about refinancing your mortgage. I am assuming you don't have the best interest rate on your mortgage.   Since you just opened a couple of credit cards, now is not a good time to try to refinance.  Opening new credit accounts will temporarily hurt your credit.   This is especially true for people with only a couple of credit cards.    But it is something you should look at in 6-12 months.   A better credit score could save you lots of money on your mortgage.

Message 9 of 14
Anonymous
Not applicable

Re: Credit cards exit strategies

Thanks ,

 

Learned a lot about keeping credits. I will take action immidately to turn QS1 to no fee if possible or maybe keep it another year for my other card to established their history. Also I'll wait a whole year on Venture and see where I would be at then.

Message 10 of 14
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