Closing Charge Cards

[Drew]

Hello All -

What's everyone's take on closing charge cards as it relates to a strong credit profile?

I ask because charge cards typically have CL's that are <$2000, thus hurting someones credit profile in terms of their average CC limit.  Target, for instance, is my lowest CL at $300 followed by Kohl's at $2000.  My actual credit cards, however, are all north of $5000.  Eventually, I want to get to a point where all of my cards have a minimum CL of 25K reporting.  There's no specific reason for that number aside from the prestige that comes along with it.

I look forward to your feedback! 

[phonic]

I'm confused. Are you asking about charge cards or store cards?

You say 'charge', but the two examples you give are both stores that, AFAIK, are credit cards.

Charge cards, such as Amex, don't report a limit but do report the highest you've spent on it recently. They also aren't used in some calculations. Store cards are almost always low limits, so as long as the rest of your report is healthy and you don't have too high of a reporting util% on them, you should be fine.

[Drew]

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@phonic wrote:

I'm confused. Are you asking about charge cards or store cards?

You say 'charge', but the two examples you give are both stores that, AFAIK, are credit cards.

Charge cards, such as Amex, don't report a limit but do report the highest you've spent on it recently. They also aren't used in some calculations. Store cards are almost always low limits, so as long as the rest of your report is healthy and you don't have too high of a reporting util% on them, you should be fine.

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Store cards is what I meant - I apologize.

[Anonymous]

Low CLs don't hurt you for scoring purposes, but an individual lender may be bothered by them.

However, I'm not sure I'd chase after this idea, just to please a potential future lender.

But if you really don't need the cards, or want to avoid an AF, and there's no utilization issue, closing them would be fine, and won't immediately affect your AAoA.

[Themanwhocan]

The Kohls card really is a Charge card, though, isn't it?  It might be best to keep that, as it might be helping your mix of credit. Probably not very significant, but since you already have it...

[phonic]

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@Themanwhocan wrote:

The Kohls card really is a Charge card, though, isn't it?  It might be best to keep that, as it might be helping your mix of credit. Probably not very significant, but since you already have it...

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Why do you say that? My wife has a Kohls card, and though we PIF every month, I'm almost positive it's a credit card. 

[PointLager]

Even though I don't have any store cards I've chatted with those who do. They keep a $1k limit revolver store card not used but kept as part of a $30k+ overall card portfolio limit. They only use the card because the store gives specials and or discounts to card members). So depends on if you and your wife would give up potential savings if you didn't use the store card.

[Themanwhocan]

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@phonic wrote:

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@Themanwhocan wrote:

The Kohls card really is a Charge card, though, isn't it?  It might be best to keep that, as it might be helping your mix of credit. Probably not very significant, but since you already have it...

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Why do you say that? My wife has a Kohls card, and though we PIF every month, I'm almost positive it's a credit card. 

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Well the online application specifically calls it a charge card:

https://apply.kohls.com/kohp_zb/app

Hmm, maybe it is a regular credit card after all. Perhaps they aren't making a distintion between Charge cards and Credit cards the way American Express uses the terms.

[indiolatino61]

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@Drew wrote:

Hello All -

What's everyone's take on closing charge cards as it relates to a strong credit profile?

I ask because charge cards typically have CL's that are <$2000, thus hurting someones credit profile in terms of their average CC limit.  Target, for instance, is my lowest CL at $300 followed by Kohl's at $2000.  My actual credit cards, however, are all north of $5000.  Eventually, I want to get to a point where all of my cards have a minimum CL of 25K reporting.  There's no specific reason for that number aside from the prestige that comes along with it.

I look forward to your feedback! 

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Generally, I would only close cards that I truly will never use, or that have fees associated with it. I myself have a tragic $200 Target card which by all logic should be closed, but since it's not costing me anything, I just use it once every 4-6 months to keep it open. The best of luck to you.

[Drew]

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@Anonymous wrote:

Low CLs don't hurt you for scoring purposes, but an individual lender may be bothered by them.

However, I'm not sure I'd chase after this idea, just to please a potential future lender.

But if you really don't need the cards, or want to avoid an AF, and there's no utilization issue, closing them would be fine, and won't immediately affect your AAoA.

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That'a exactly what I mean; lenders may be put off by the low CL and not be compelled to offer a higher CL because of that. I'm sure they have specific demographics associated with different TL's and their CL's.