topic Re: When to close Cards (New) in Credit Cards

When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 15:56:39 GMT

I'll make this short and sweet. I have 2 cards (recently opened) 1 is TD for 1K; and one is Penfed Cu for 1K.

TD opened less than 6 months ago (almost there). Penfed CU opened literally yesterday

Lesson learned lol. TD is just stupidly conservative (now i know) and Penfed i thought wouldn't be, but I have over 400K TCL and 20-60K limits on different cards.

I talked to TD about recon (have a thread on this; no go; conservative; stingy; we know..) and Penfed I talked to an underwriter something about too mucch available credit, pyramiding debt?? Not sure .. I guess some lenders don't like alot of AVAILABLE Credit. AZEO $5-10/month - no debt. No loans. Ficos over 760. 2/12 cards.

But back to my main question, I know some people advised on other thread keep opened atleast a year then close it. If I feel as if a year is excessively long to keep open cards that I resent, is 6-months good enough? I really can't make use of such small cl's and all evidence points to 0-slim growth in the future in my situation. These were impulse-applications; i havent really applied in a few years prior just maintaining my existing creditors.

EDIT: Additional question, Will these low-limited cards affect chances of higher cl's in the future with different lenders, when I have years of history with X50 the limit already? (if its opened OR Closed)

Re: When to close Cards (New)

gdale6 — Tue, 23 Mar 2021 16:24:24 GMT

Its up to you, I am one who prefers a year but if you want them gone 6 mos is good too.

No on the edit question, these low limits are not likely to affect other lenders and their limits but they are a warning of approaching the most that they feel like lending in contrast to your income. If you have the income to support the spending on them this would be a good thing over the long term, shows you can borrow and payback.

Re: When to close Cards (New)

Remedios — Tue, 23 Mar 2021 16:24:47 GMT

You can close them at any time.

As far as future, it seems you've reached ceiling for your profile/income.

Perhaps you should evaluate cards you have and close ones you do not use since that's majority of them if you want to increase chance of decent approvals going forward.

You have close to half a million in available credit, you're letting a cup of coffee report, there is no incentive there for lenders.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 16:39:59 GMT

@Remedios wrote:
You can close them at any time.
As far as future, it seems you've reached ceiling for your profile/income.

Perhaps you should evaluate cards you have and close ones you do not use since that's majority of them if you want to increase chance of decent approvals going forward.

You have close to half a million in available credit, you're letting a cup of coffee report, there is no incentive there for lenders.

Can you elaborate on the last part? i'm a bit confused because I do heavy spend on these cards but I never allow the statement to show the high usage on any cards.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 16:34:10 GMT

Same as above, should I let my normal spending report each month? I only pay-in full on every single charge am I doing something wrong?

Re: When to close Cards (New)

Aim_High — Tue, 23 Mar 2021 16:38:59 GMT

I had a similar situation with a $1K Discover approval even though I had very high limits on other cards including a high Discover card. Trying to grow it was more work than I was willing to invest, so I just closed it immediately. The one-year age guideline you've heard about is more related to closing a card too soon after you claim a SUB. Some lenders (particularly AMEX?) really frown on that. You can close it immediately if it's not useful but you've already taken the FICO hit for that new account. Closing it shouldn't cause other damage with your low utilization.

Some lenders are very sensitive to high TCL, and it appears TD is one of them. That could especially apply relative to your reported income and/or debt loading. Agree that if you want to open new cards, closing some less valuable ones might be advisable.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 16:42:45 GMT

Thanks for your input, it helps. My income though is roughly 160K/yr to be clear. I want to stay within guidelines of this forums, but in this situation would you advise to close it immediately without getting the bonus, or get the bonus then close it? I dont care either way but I just don't want it to look 'bad'. Maybe i'm over-thinking it. Thanks for all your support.

Re: When to close Cards (New)

Remedios — Tue, 23 Mar 2021 16:46:19 GMT

@Anonymous wrote:
Can you elaborate on the last part? i'm a bit confused because I do heavy spend on these cards but I never allow the statement to show the high usage on any cards.

A lot of lenders do not provide trended data, so all they see is that you're using miniscule amount of your available credit.

If they cannot see it, it doesn't exist other than in "high balance" field, but computer doesn't really care about that.

Also, some lenders do not put the the mid-cycle amount in that field but only what's on the highest statement (Amex and Citi being examples).

Regardless of showing use, you have a lot of available credit.

Before you pay down your cards, what's the normal spend for you and why AZEO?

The reason some lenders will not give you high limits is because they feel there's no chance that their cars will see a decent use since you have all these other cards, and that's a rather reasonable way to look at it unless you're spending half of your available credit monthly.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 16:51:37 GMT

If I don't do AZEO since i pay in full I noticed every month is a ding from -5 to -10. I know I have 'alot' of available credit but I see some users like @Mahraja who has over 1.7M in available credit - not knowing income ofcourse but certain people continue to get massive additional credit.. Should I basically max out a card to show usage on statement and pay-in-full and take the ding for the month? I'm trying to learn how to get internal spending to reflect on credit reports.

Re: When to close Cards (New)

Horseshoez — Tue, 23 Mar 2021 16:52:27 GMT

@Anonymous wrote:
I'll make this short and sweet. I have 2 cards (recently opened) 1 is TD for 1K; and one is Penfed Cu for 1K.
TD opened less than 6 months ago (almost there). Penfed CU opened literally yesterday

Lesson learned lol. TD is just stupidly conservative (now i know) and Penfed i thought wouldn't be, but I have over 400K TCL and 20-60K limits on different cards.

I talked to TD about recon (have a thread on this; no go; conservative; stingy; we know..) and Penfed I talked to an underwriter something about too mucch available credit, pyramiding debt?? Not sure .. I guess some lenders don't like alot of AVAILABLE Credit. AZEO $5-10/month - no debt. No loans. Ficos over 760. 2/12 cards.

But back to my main question, I know some people advised on other thread keep opened atleast a year then close it. If I feel as if a year is excessively long to keep open cards that I resent, is 6-months good enough? I really can't make use of such small cl's and all evidence points to 0-slim growth in the future in my situation. These were impulse-applications; i havent really applied in a few years prior just maintaining my existing creditors.

EDIT: Additional question, Will these low-limited cards affect chances of higher cl's in the future with different lenders, when I have years of history with X50 the limit already? (if its opened OR Closed)

Your post is very interesting, I've opened a credit card within the last 9 months from each of the two financial institutions you listed, and my experience is rather different; I have a TDCash card with a $5,000 SL and a PenFed Signature Rewards card with a $6,000 SL. If anything, given my Chapter 13 discharge was just a year ago, I've found both institutions to be not at all conservative. Go figure.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 16:53:34 GMT

Data points, to you may not have alot of 'available credit' and as @Aim_High mentioned; some lenders are sensitive to that ? only my guess, not sure.

Re: When to close Cards (New)

FinStar — Tue, 23 Mar 2021 17:03:30 GMT

@Anonymous wrote:
If I don't do AZEO since i pay in full I noticed every month is a ding from -5 to -10. I know I have 'alot' of available credit but I see some users like @Mahraja who has over 1.7M in available credit - not knowing income ofcourse but certain people continue to get massive additional credit.. Should I basically max out a card to show usage on statement and pay-in-full and take the ding for the month? I'm trying to learn how to get internal spending to reflect on credit reports.

Like @Mahraja, I have over $2MM in a variety of biz and personal accounts, but you cannot compare their profile (or mine) to yours. Income/assets are going to drive a variety of lending decisions, there's also the depth of profile + age/history (not to mention scores), but having the appropriate strategies are some of the key drivers for these high limits, even in today's pandemic environment.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 17:05:33 GMT

I forgot to mention I'm in my 20s, I suppose. But I think I get it, I understand. Maybe its also an issue my income is lower than available credit..

Re: When to close Cards (New)

Aim_High — Tue, 23 Mar 2021 17:19:29 GMT

@Anonymous wrote:
I forgot to mention I'm in my 20s, I suppose. But I think I get it, I understand. Maybe its also an issue my income is lower than available credit..

Exactly. With as much as we all disclose on My FICO, there's still a lot of profile information you don't really see. It's difficult to compare profiles. Some profiles having $1M or higher in credit might have incomes and spending much higher than that. Meanwhile, you're already at 2.5x income in credit limits relative to income. While we've had members exceed that by multiples, it starts to concern some lenders and hold back your progress.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 17:22:11 GMT

Thanks for your help. I think I will close these 2 cards out honestly today, just move on. I think I'll keep my existing cards and just let time thicken my profile. Weed-out the low limits and garden for a few years. I do have some good lenders with good limits, it's just that I had a depository relationship with these specific creditors but I think I will close them out completely, and move on to the creditors/lendors that do work for me and do like my specific profile.

Re: When to close Cards (New)

Aim_High — Tue, 23 Mar 2021 17:26:00 GMT

@Anonymous wrote:
If I don't do AZEO since i pay in full I noticed every month is a ding from -5 to -10. ... Should I basically max out a card to show usage on statement and pay-in-full and take the ding for the month? I'm trying to learn how to get internal spending to reflect on credit reports.

That 5-10 point 'ding' is temporary. Utilization loading is temporary and scores rebound quickly once it's paid down. AZEO is a helpful short-term technique when you're applying for new credit to maximize your score, especially if it's marginal for a card approval. It's not necessary to do it day-in-day-out. Allowing statement balances to occassionally report will better show new lenders that you are using your cards and managing them well. Save the AZEO to get the point boost when you need it, a month or two before applying for new credit. Keep in mind, though, that with your limits already at 2.5x income, that could hold you back on approvals regardless of how much is reporting.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 17:30:03 GMT

Wanted to ask you something final about reflecting balances, another poster said that 'highest balance' wouldnt apply/matter because computers dont consider them. Would this help on a manual review? Just out of curiousity to show that i'm actually using my cards

Re: When to close Cards (New)

PullingMeSoftly — Tue, 23 Mar 2021 17:35:19 GMT

@Anonymous wrote:
Thanks for your help. I think I will close these 2 cards out honestly today, just move on. I think I'll keep my existing cards and just let time thicken my profile. Weed-out the low limits and garden for a few years. I do have some good lenders with good limits, it's just that I had a depository relationship with these specific creditors but I think I will close them out completely, and move on to the creditors/lendors that do work for me and do like my specific profile.

Rather than close the cards just due to low limits, consider the value of the rewards/subs/multipliers and close cards that are not useful from a value perspective. You must have applied for those cards for a reason, hopefully because they would bring in value to your lineup. If you're going to pull weeds, might as well jettison what isn't giving you a return, which will have the added benefit of lowering some of your overall open credit and allow you to shoot for more opportunities in the future.

Re: When to close Cards (New)

Anonymous — Tue, 23 Mar 2021 17:40:27 GMT

I wanted to start doing closing out low CL cards, such as penfed cash rewards. I opened it because of the cashback, but with a 1K limit it's not going to work out for my spending, and i noticed alot of platforms dont allow you to do split payments. & then additional research (correct me if i'm wrong) suggests using your CL (in this instance, a 1K limit) and paying it off multiple times a month is considered 'cycling' which is 'bad'/ AML in itself? I never had to research this because my other limits have been sufficient per every statement period (30 days) so I never 'cycled'. This might be food for thought or just plain inaccurate.

Re: When to close Cards (New)

Aim_High — Tue, 23 Mar 2021 17:47:32 GMT

@Anonymous wrote:
Wanted to ask you something final about reflecting balances, another poster said that 'highest balance' wouldnt apply/matter because computers dont consider them. Would this help on a manual review? Just out of curiousity to show that i'm actually using my cards

Probably not. The exception mentioned was that a few cards may report a mid-cycle balance. A highest-balance-reported on a card could have happened years ago and your spending and income patterns may be quite different today. The better way to show usage is periodically allowing statement balances to report to the credit reporting bureaus. You've got overall utilization rates protected pretty well with those high TCLs relative to income. Just try to avoid very high individual rates on any single card also, as that will cause a larger spike in your score than if the same debt is spread over several cards. Under 9% is optimum for scoring, but under around 25% of limit isn't unreasonable to report. That shows good usage of existing limit without appearing debt-burdened. As I mentioned, scores will rebound quickly once it is paid to $0.