topic Re: Why close cards/combine limits? in Credit Cards

Why close cards/combine limits?

masscredit — Sun, 02 Aug 2015 17:00:20 GMT

It seems that a lot of people close cards or combine limits then close one of the two. I can see if there is a A/F but what is the benefit of doing this if there isn't. I look at it as multiple cards have multiple ways of growing. And even if it doesn't grow, it can help thicken the file a little.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:03:31 GMT

I'm interested in everyone's answer, too.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:03:58 GMT

Depends on what your file looks like. Althouhg my AAoa is low, I have sufficient Visa and MC now and sufficient credit limits on those where I have zero use for store cards. I will keep Barney's, Neiman Marcus and Bloomingdale's but other than those I'm cutting store cards out of my profile. Interest rate is too high and I'm missing out on the significant rewards I can get from Visa and MC.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:04:58 GMT

forgot Walmart and J Crew- will keep them becasue they are two of my oldest trade lines. Won't use them except once a year though.

I don't have any interest in having tons of store cards.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:09:41 GMT

The main benefit is to get a bigger credit limit without having to go thru HPs. With Chase for example it is by far the easiest route to get bigger limits on existing cards. For every creditor there is a max anoint of dollars that they are going to extend to card holders. For many people, having one card with a $30K limit is better than two with $15K each. Gives you a lot more flexibility in making large purchases and if you have no need for the rewards of the card(s) to be closed, there really is no downside to closing one or more out and combining limits.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:14:07 GMT

COMBINING limits...that's a great idea. You combine limits so your overall credit profile looks better than it actually is. If Chase gives you 3 credit lines of $7,000 each, combine them and BAM... you have a $21,000 limit. When other lenders see you have a $21K credit limit, they are more apt to give you a $20K limit. You always want to work on getting a top limit as high as you can.

Myself, when I hit the $17K mark with my Lowes store card, I immediately noticed my Starting limits on other cards jumped up by $5-10K. Prior to that I was only getting $3K limits.

For CLOSING cards, I don't like it unless it's the only way to get rid of an annual fee (PC first)

If I can keep 1 card open for 10 years without thinking about it, that's basically 20 years of free credit history when it's all said and done. It's even better when they're store cards I'll never use because I won't be tempted into spending on them.

Cut up or sock drawer store/credit cards instead of closing them (non-AF cards) ... milk the AAoA benefits as long as you can

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:14:06 GMT

Why close cards/combine limits? - Because I can Now for the serious answer.

A.) I have no need to decrease util by having more cards. Util is low and remains low.
B.) No one needs 10+ cards to "thicken their profile". 3-4 works out fine.
C.) I like to keep things simple. Im not scared of upsetting my AAoA by closing a few cards and even if that was a concern its ten years from now O.o Id imagine the rest of my cards would have grown a bit by then.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:20:14 GMT

@Anonymous wrote:
The main benefit is to get a bigger credit limit without having to go thru HPs. With Chase for example it is by far the easiest route to get bigger limits on existing cards. For every creditor there is a max anoint of dollars that they are going to extend to card holders. For many people, having one card with a $30K limit is better than two with $15K each. Gives you a lot more flexibility in making large purchases and if you have no need for the rewards of the card(s) to be closed, there really is no downside to closing one or more out and combining limits.

Well, there is a slight longterm downside that eventually you lose the age of the card being closed, but that is usually many years from now. (But "no downside" is just a little too strong!)

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:24:57 GMT

@Anonymous wrote:
@Anonymous wrote:
The main benefit is to get a bigger credit limit without having to go thru HPs. With Chase for example it is by far the easiest route to get bigger limits on existing cards. For every creditor there is a max anoint of dollars that they are going to extend to card holders. For many people, having one card with a $30K limit is better than two with $15K each. Gives you a lot more flexibility in making large purchases and if you have no need for the rewards of the card(s) to be closed, there really is no downside to closing one or more out and combining limits.
Well, there is a slight longterm downside that eventually you lose the age of the card being closed, but that is usually many years from now. (But "no downside" is just a little too strong!)

10 years is a long time. By them I'll be a billionaire or dead so I won't care :-)

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:31:03 GMT

@Anonymous wrote:
COMBINING limits...that's a great idea. You combine limits so your overall credit profile looks better than it actually is. If Chase gives you 3 credit lines of $7,000 each, combine them and BAM... you have a $21,000 limit. When other lenders see you have a $21K credit limit, they are more apt to give you a $20K limit. You always want to work on getting a top limit as high as you can.

Myself, when I hit the $17K mark with my Lowes store card, I immediately noticed my Starting limits on other cards jumped up by $5-10K. Prior to that I was only getting $3K limits.

For CLOSING cards, I don't like it unless it's the only way to get rid of an annual fee (PC first)

If I can keep 1 card open for 10 years without thinking about it, that's basically 20 years of free credit history when it's all said and done. It's even better when they're store cards I'll never use because I won't be tempted into spending on them.

Cut up or sock drawer store/credit cards instead of closing them (non-AF cards) ... milk the AAoA benefits as long as you can

There have been endless discussions about closing non-AF cards, all over the forums. Two camps, and I don't know if anyone has been able to change anyone's mind. I've characterized it as horder vs minimalist (to reveal my bias!) but the two views are essentially:

1) Keep them open as they do no harm. This avoids the 10 year drop off hit to AAoA, every bit of CL adds to UTIL etc

2) Close them. If you don't use them, why bother keeping them open. Doing periodic spend to keep cards open can be a pain and is spend that could earn more rewards on another card.

I've also argued that the benefits of either approach is very small, so, as is not uncommon, you end up with fairly heated exchanges about something with a small impact.

Basically, most cards people consider closing are those that they got early with small limits, so the util argument isn't that strong. And the dropping off of the AAoA is a long way away when your credit profile and very likely the scoring system will be different.

On the other side, keeping cards open and the rewards wasted is also small (auto pay of small recurring charges) and while the chance of fraud is there on accounts you don't use, it's not your liability either. One of the stronger arguements for me is the possibility of an issuer adding an AF which you don't see in time, but that is going to be very rare.

Not always true, but those at the beginning of credit or rebuilding seem more inclined to view 1, they worked hard (well, sort of!) to get the card, so it's valuable, why waste it. With a longer history and a thick file, worrying about preserving every card is much less compelling.

Bottom line, do whichever makes you feel happier, it makes almost no difference!

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:35:49 GMT

With a longer history and a thick file, worrying about preserving every card is much less compelling.
Bottom line, do whichever makes you feel happier, it makes almost no difference! >>>> Spot on 👌👌👌

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 17:36:11 GMT

Forgot to add the other CLD-type stuff.

1) If you keep a card open, and the same issuer won't give you a new card because of exposure, you can offer to close it and maybe get the new card

2) But if you had closed it first, you are more likely to get the new card anyway!

Re: Why close cards/combine limits?

masscredit — Sun, 02 Aug 2015 18:21:47 GMT

Good idea combining limits to allow one card to grow much faster then new cards will be more likely to start around that higher limit.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 19:53:24 GMT

@masscredit wrote:
Good idea combining limits to allow one card to grow much faster then new cards will be more likely to start around that higher limit.

I don't know if that is the case (depending on the CL). Combining cards does not (of course) in itself change the total CL. Evidence of issuers "matching" is (IMO) still very vague, and confounded by the fact that you get a good CL on one card because your report is good, and other issuers may make the same decision without any conscious matching.

The usual big win, especially with Chase, is to open a *new* card, which will often have a CL much greater than any CLI you would get, and then combine that limit with the card you really want. So its not combining limits that helps, it's getting the new card in the first place. Now with Chase sensitivity to new accounts, this gets harder!

Re: Why close cards/combine limits?

bengalikejenga — Sun, 02 Aug 2015 20:10:51 GMT

@masscredit wrote:
It seems that a lot of people close cards or combine limits then close one of the two. I can see if there is a A/F but what is the benefit of doing this if there isn't. I look at it as multiple cards have multiple ways of growing. And even if it doesn't grow, it can help thicken the file a little.

in my case, as my credit profile grows i would begin to close cards and combine limits to simplify things, i have lots of reminders on my phone, my mint app and calender.

I would as my profile grows, i would like to simplify things to about having 6-8 major cards that i use on a monthly basis.

and with my credit card profiles, i have quite a few cards that have the same rewards in gas, airline, supermarkets and amazon. soo it would be easier to trim down the cards soo i dont have redundant cards.

with multiple cards sharing the same rewards catergory, it makes it hard to maximize my rewards, especially when i dont spend a lot on my credit cards.

Re: Why close cards/combine limits?

icyhot — Sun, 02 Aug 2015 23:17:09 GMT

After I close and combine all the cards I plan on closing and combining, I'll have 8 cards, 6 that I use regularly. I'm weird about having more than 10, so if I ever want to app for another, I'll have some room to do so.

Re: Why close cards/combine limits?

Anonymous — Sun, 02 Aug 2015 23:33:01 GMT

I don't want to close of combine any of my cards right now, because I still have a late payment or two showing from years ago. I want all of my cards to report as much as possible so that the percentage of on time payments is increased. I love to see those little green boxes showing that payments are made every month on time.

Re: Why close cards/combine limits?

noobody — Mon, 03 Aug 2015 00:43:17 GMT

Another angle to consider, if this particular lender introduce a new product in the future, I could have a option of PC to it, avoiding take one or three HP.

Re: Why close cards/combine limits?

Anonymous — Mon, 03 Aug 2015 06:21:36 GMT

I would have to agree. Some say it's foolish to try to get in with every bank out there, for rebuildng it is, but that is a good way to be on the offensive for new rewards opportunities.

Re: Why close cards/combine limits?

takeshi74 — Mon, 03 Aug 2015 13:31:23 GMT

@masscredit wrote:
It seems that a lot of people close cards or combine limits then close one of the two. I can see if there is a A/F but what is the benefit of doing this if there isn't. I look at it as multiple cards have multiple ways of growing. And even if it doesn't grow, it can help thicken the file a little.

Not everyone decides whether to close or not based solely on the AF despite how popular that meme is around here. That said, do whatever it is that works for you.

I don't keep cards that are of no use to me. My cards have grown just fine without the cards I didn't need. My file is plenty thick without the cards I do not need. My scores are just fine without the cards I don't need.

@masscredit wrote:
Good idea combining limits to allow one card to grow much faster then new cards will be more likely to start around that higher limit.

Higher limits begets higher limits is yet another popular meme and it's not necessarily correct. Limits do factor into one's credit profile but there are many other factors as well. I've received some very low inital limits on recent cards despite having a number of higher limits cards. One cannot simply assume that having higher limit cards means that all subsequent cards will also have higher limits.

@noobody wrote:
Another angle to consider, if this particular lender introduce a new product in the future, I could have a option of PC to it, avoiding take one or three HP.

Though typically you miss out on any sign on bonus. People here tend to obsess over HP's as well but they'rea relatively small factor and those that see HP's as a denial reason generally have other credit issues that they need to address.