Is now the time to close my secured cards?

[LadyJEsq]

Hello Community,

I’ve recently been approved for a few unsecured cards. Initially, I was going to keep my secured cards open, and just not use them. But now I’m wondering if I should just close them. On the one hand, I feel that the $1500 CL doesn’t add much to my TCL, but on the other hand, both accounts are more than two years old. I do have a student loan which is much older, and for TU and EQ, I have a CC that I had years ago still on my CR, but for EX, they are my oldest CCs. With the new cards that I’ve opened, I have a total of 7 CC. I saw somewhere that 5 is the magic number that companies like to see. Is that true? Should I close these two or not?

Thanks in advance!

[heyarrnold]

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@LadyJEsq wrote:

Hello Community,

I’ve recently been approved for a few unsecured cards. Initially, I was going to keep my secured cards open, and just not use them. But now I’m wondering if I should just close them. On the one hand, I feel that the $1500 CL doesn’t add much to my TCL, but on the other hand, both accounts are more than two years old. I do have a student loan which is much older, and for TU and EQ, I have a CC that I had years ago still on my CR, but for EX, they are my oldest CCs. With the new cards that I’ve opened, I have a total of 7 CC. I saw somewhere that 5 is the magic number that companies like to see. Is that true? Should I close these two or not?

Thanks in advance!

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Do they have AF's? If so, yes. Close them. Otherwise, leave them open. By the time those accounts fall off of your credit report, your other accounts will be ~8 years old. 

[LadyJEsq]

Yes, but they're nominal ($36 and $39). Still close them? 

[heyarrnold]

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@LadyJEsq wrote:

Yes, but they're nominal ($36 and $39). Still close them? 

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If you do not mind paying them, go ahead and keep them. But IMHO, it's not worth it. 

After you close an account, the age of the account will remain on your report for the next 10 years and it will still be factored in your FICO score. And 10 years from now, your other accounts will be about 8 years old. So by the time your secured cards fall off, then the impact on your score when that happens will be very minimal, if any at all. 

[LadyJEsq]

Ahhhhh, so that's how it works! Thanks for the info HA!

[heyarrnold]

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@LadyJEsq wrote:

Ahhhhh, so that's how it works! Thanks for the info HA!

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NP. Best of luck!

[TiggerDat]

Worried about the AF?  Ask to have them waived.  If they won't waive them, ask to have them upgraded to unsecured status.  If that isn't a possiblity now, but will be in the future, then keep them open for a bit.  Do they have rewards?  If so, do those rewards pay for the AF and are they better than the rewards on your other cards? 

I had a Merrick card which would not convert to unsecure status ever.  I kept asking, trying to find a way to do so.  I even called thier underwriters, which is hard to do for Merrick since they don't release that information too easily and if you call their hdq. then you have to make it very clear that you want the underwriters and not customer service.  Even then you might still have to call back a time or two!  I probably kept the account open longer than I needed to out of respect for helping me build my credit, well rebuild it.  Finally, I simply closed the account when I was tired of the fact that I was paying money I really didn't need to and because my security funds were not earning interest.  (I do wish they had a way to get the card unsecure at some point and even wish they had a rewards program.  I think if they added rewards to their card, they could easily compete with CapOne!)

The AF may not be too much, but it is an OK dinner out for two...  You just have to weigh in on the option of keeping them open and what the future will hold for that card.  If it can be upgraded in any way or the AF be waived, then it might be worth keeping one or both of them open. 

Good Luck!

[LadyJEsq]

Thanks for the reply TD! If either of my cards offered any rewards, I would certainly reconsider closing them. Unfortunately, neither do. I tried for an upgrade for the one card that was eligible (when they called me) but was denied. It was quite frustrating because I had the card for more than 1 1/2 and I always paid it on time and IF. I also had all my bank accounts through them and keep decent balances without any charges. No need to stay loyal to them. 

[Open123]

Since you have 3 unsecured lines, here's what I would do:

1.  Request fee waivers - if refused, close the card.

2.  When (if) rates increase, close them and reinvest for a higher return.

In general, I think anything more than 3 cards is an individual preference.  What you'd like to do is increase your CLs to an amount sufficient to support your monthly expenditures.  Ideally, you'd want montly balances to be no more than 10% - 15% of your Aggregate CLs.

In time, if you find cards you like, rewards you value, or benefits worthwhile, apply for them without fretting over scoring constraints.  The only exception is if you were preparing for a large fixed loan; in this case, I'd refrain from applying or incurring HPs until after your loan finalizes.

Good luck!

[LadyJEsq]

Thanks for the info Open! I'll certainly keep that in mind.