Target Red Card

[Carloscda40]

Had this card for 2 1/2yrs now, limit decreased from $500 to $400.

Payed off the card recently down to 0. If I close the card how much of a hit would my score take?

Slowly rebuilding, presently at 602.

Thanks in advance

[coldfusion]

The card should continue to report for another 10 years and for most people $400 doesn't make up a large percentage of their total limits across all cards.  No guarantee but since you've paid the balance down to $0 closing it normally wouldn't have a big impact on FICO scores, maybe more so for Vantage 3.0 scores but basically anyone who matters doesn't use those. 

Any particular reason why you're motivated to close the card?  

[911gt34life]

I also have it with 700 but probably keep it open forever...

I spoke to them they told me you can't request credit increase which is sad...

[MrsCHX]

There's no way of knowing what it'll do to your scores without knowing other info (other cards and their limits, current balances on cards, other derogs, etc)

But, since you said you're rebuilding and you are only at ~600 then you have other stuff going on. And if you just recently paid it off, does that mean you were carrying a balance for awhile?

Just sock drawer the card for now and keep working on your rebuild. 

[smcj]

If the card has no anual or monthly or whatever-similar fees, there is no pressing reason to close it.

If you do close it, you permanently eliminate the possibility of its CL being raised in the future.  For a healthy credit profile this could be a take it or leave it.  But for rebuilding, any opportunity you have that is zero-cost and zero-downside is an opportunity you want to keep.

I would charge a candy bar or something similarly tiny-cost on it (and pay it off immediately, before statement cycle even) once every 11 months (really 12, but if you do 11 you won't miss month 12 and risk closure due to inactivity) -- and otherwise, keep it sockdrawered.

Net, it's not about current score impact.  It's about what it can do for you in the future, even if unexpected -- it's a toehold.  And when rebuilding your credit, toeholds are exactly the things you need.

Post-rebuild (or post-whatever-goal or criteria), or if it suddenly develops an annual fee or whatever, THAT is when to consider closure.

Just my $0.02, FWIW.

[Pppoolboy]

If it's not working for ya, shut it down.  I went through a phase where I didn't want any card with a limit less than $5000 on my report.  At some point I will raise that to $10,000.  I understand. 

I have one with a limit of $3500 but almost never use it.  Paying it is annoying because there is no app.  Gotta do it via browser.

Also, the Target Red Card (now Circle Card) is fairly meaningless because you can get 5% back with the "debit" card which simply debits a chosen bank account. 

[coldfusion]

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@Pppoolboy wrote:

Also, the Target Red Card (now Circle Card) is fairly meaningless because you can get 5% back with the "debit" card which simply debits a chosen bank account. 

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That would depend upon how meaningless one finds the additional legal protections afforded credit cards when compared to debit cards. 

[Pppoolboy]

Can't argue with that though I will point out the Target Circle "debit" card isn't actually a "debit" card (which is why I put it in quotes), so I'm not sure what protections it grants. 

Debit cards immediately withdraw funds from an internally connected bank account when a purchase is made.

This card, OTOH, initiates an ACH from an externally connected bank account which then pays the card in a couple of business days after the purchase.  ACHs usually do have pretty good protections and can be reversed within, IIRC, 5 business days or so.

What I do is connect my Circle "debit" card to a checking account in which I don't have more than a couple of bucks to keep it open.  I don't keep money in non-interest-bearing accounts.  When I make a purchase at Target with the card, I will look at the receipt and, as I'm walking out of the store, Zelle myself the total of that receipt so it's available a couple of days later when the ACH withdrawal happens.

Now, if I were purchasing stuff from Target all the time, I'd just use the credit card.  But I only purchase stuff from Target maybe once a month so it's not a big pain to do the above.  Otherwise, yeah, it would be too much of a pain to deal with those steps.

[Jessie]

Use a credit score simulator to estimate the effect. Even if your score does go down, it won’t cost you anything unless you apply for a mortgage or auto loan in the next few months.

[Drifter73]

Why not just sock draw it until they close it for no spend in a year or two? The effect of them closing it or you closing it will relatively be the same. No need to start the 10 year clock for it to drop sooner than needs be.

Besides, its a great emergency backup card. Target's here have groceries, electrics, clothes, small kitchen appliances, a StarBucks, Pizza Hut, and a CVS pharmacy. All of which the Red Card 5% can be used for. 😉