When to cancel secured cards

[ujocka]

Super excited that my wife and I ran our credit today and I was elated to see an 80 point increase(scores in signature) in my FICO due to our chapter 13 BK falling off our report..We show no negative or derogatory accounts now. I have two secured credit cards with zero balances with limits of $2000 each. Thinking I want to get a Delta Skymiles and a Hilton Honors card for our vacations. Assuming I apply and am approved for both of these, any advice on how long to wait to cancel my secured cards to have minimal impact on my score? Sure would like to get my $3000 deposit back. Can anyone shed light on the maximum limits for Delta Skymiles and Hilton Honors visa or Amex? Thanks in advance.

[Anonymous]

Hello. Congrats to you and the Mrs. on your achievements! Can you tell us which banks these secured cards are through? Are they through banks that will eventually unsecure the card? 

The reason I ask is because it could help to keep one provided it became unsecured for AAoA purposes. For instance, say one of your secured cards is with Bank of America. That will eventually become unsecured, you will have your deposit returned and then you could request a CLI and add rewards to it. This way it is a more rewarding card and you get to keep one of your oldest cards post bankruptcy.

Otherwise, to answer your question, if you and the Mrs. can get approved for great new cards, there is no reason to hang onto the secured cards if they are not going to grow. Just be sure that the loss of their reporting credit lines is offset by the new cards that replace them so that it does not negatively effect your debt-to-credit ratio. 

[ujocka]

Thank you for the fast reply. They are with OpenSky and Merrick Bank. There has been a little unsecured growth (approx $500 each) since we opened them a year and a half ago. Since our FICO just shot up I guess it is possible that they may both offer more unsecured growth in the next few months, but I don't believe the potential of these cards is very great. Im not too concerned about DTC ratio as a never have high balances on the cards.

[Anonymous]

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@ujocka wrote:

Thank you for the fast reply. They are with OpenSky and Merrick Bank. There has been a little unsecured growth (approx $500 each) since we opened them a year and a half ago. Since our FICO just shot up I guess it is possible that they may both offer more unsecured growth in the next few months, but I don't believe the potential of these cards is very great. Im not too concerned about DTC ratio as a never have high balances on the cards.

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OpenSky and Merrick...yep, drop those cards as soon as you get better ones. They served their purpose and you have moved on to bigger and better! Please report your approvals in the Credit Card Approvals section once you have obtained the cards.

[Anonymous]

I'd wait until the positive effect they are having on your credit profile is minimal.  Use them as leverage for getting better cards and get those credit limits up on those cards first.

[SunriseEarth]

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@ujocka wrote:

Super excited that my wife and I ran our credit today and I was elated to see an 80 point increase(scores in signature) in my FICO due to our chapter 13 BK falling off our report..We show no negative or derogatory accounts now. I have two secured credit cards with zero balances with limits of $2000 each. Thinking I want to get a Delta Skymiles and a Hilton Honors card for our vacations. Assuming I apply and am approved for both of these, any advice on how long to wait to cancel my secured cards to have minimal impact on my score? Sure would like to get my $3000 deposit back. Can anyone shed light on the maximum limits for Delta Skymiles and Hilton Honors visa or Amex? Thanks in advance.

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Congrats on your credit success!   IHMO, close your secured cards right after you apply for and get approved for your Delta and Hilton Honors cards.  The secured cards served their purpose and, AFAIK, neither one will graduate.  

As for AMEX, the old guideline is that their CLs max out somewhere around 40% of the income you include on their apps.   You may not get that high immediately on approval for a new account, but you can ask for a CLI at a fairly rapid pace with AMEX.  As for Citibank, I'd have to defer to someone with more Citi experience.   My only core offering CC of theirs is Double Cash, but those are notoriously stingy with SLs.  

[Anonymous]

Congrats on your recent success.
You may be ok with apping for whatever at this point; I'd close the secured right after.
Just for reference, I got Amex Hilton for 5k with 650 EX last year and Citi gave me 1.7k on DC this year with 674EX. Every situation is different, but Amex might give a better SL

[Chickenpotpie]

Congrats on getting your financial house in order!  Its a fantastic feeling and one that I still pinch myself over. 

Sure, go ahead and apply for something, your scores should support it.  but I wouldn't close the secured card right away until you know what your limit will be.

When my bk fell off, I waited a good 3 months.   I'm much more naturally cautious though but I probably could have within the first 30-45 days.  If the line you're going for covers that card and then some, then sure let it go and get your money back.  Its served its purpose.

I don't think you should go on an app spree though. Some  banks get spooked by that behavior so probably best to stick with maybe one or 2 for now.

[ujocka]

I appreciate all of the advice and words of encouragement. I think I will go ahead and pull the trigger on both apps. I will probably cancel both secured cards very shortly thereafter. My income is about $130k with no debt other than a mortgage so I'm hoping for a decent CL.