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Closing Accounts

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Closing Accounts

Curious, is there ever a good case for closing CC's?  I currenlty have 7 and really only use 1 or 2 regularly.  The 2nd being Discover which I only use for the 5% quarterly rewards.   5 of the cards are what I'd call regular CC's and the other 2 are Lowe's Card and Kohl's.  Was thinking of cleaning up some for security reasons and wondered if it's a good idea or not.  Haven't used the Lowes($12k limit) card since a big home project a few years ago and I picked up a Cabelas Visa($12k limit) last year which they just swithced to Master Card and I wish I hadn't as the rewards really aren't as good as I thought they were.

Message 1 of 8
7 REPLIES 7
Valued Contributor

Re: Closing Accounts


@wahawks2018 wrote:

Curious, is there ever a good case for closing CC's?  I currenlty have 7 and really only use 1 or 2 regularly.  The 2nd being Discover which I only use for the 5% quarterly rewards.   5 of the cards are what I'd call regular CC's and the other 2 are Lowe's Card and Kohl's.  Was thinking of cleaning up some for security reasons and wondered if it's a good idea or not.  Haven't used the Lowes($12k limit) card since a big home project a few years ago and I picked up a Cabelas Visa($12k limit) last year which they just swithced to Master Card and I wish I hadn't as the rewards really aren't as good as I thought they were.


It is really a personal decision.  Closing an account won't affect your average age of accounts until it falls off your report which is typically 10 years.  Utilization certainly matters in regards to score and you have a nice buffer.  Your Kohl's card is unlikely to have a large credit limit so that wouldn't matter IMO.  I wouldn't personally close the Lowes or Cabelas simply because of your larger credit lines.  By keeping these open, the buffer from those higher credit limits can help you score remain more stable when charging purchases on the cards that you do use(especially large purchases). 

 FICO 8
Message 2 of 8
Member

Re: Closing Accounts

Thanks.  Kind of what I thought.  this Kohl's is small.  Only $500 and been that way for many, many years.  Only have it so the wife can get use the stupid Kohls coupons that require the card use.  She then pays it right off afterwards.

Message 3 of 8
Valued Contributor

Re: Closing Accounts

People close cards for good reasons all the time, useless SD cards, AF cards that can't be justified by rewards, rebuilder cards that have served its purpose or just for simplicity, I myself closed 2 cards last year taking my total personal cards from 8 to 6. As long as you keep at least 3 cards for scoring maximization purposes and that closed card(s) isn't you oldest account by a long shot (few years) you'll be just fine. All closed cards will (in most cases) continue to report and contribute to age related scoring factors for up to 10 years, the only possible immediate negative effect is the effect of the lost credit limit on your utilization, which can easily be controlled and mitigated.
Message 4 of 8
Frequent Contributor

Re: Closing Accounts

Most important as stated above you will want to keep your oldest  cc account open,because when it's been closed for 10 years the credit bureaus will remove it from all three cr's.It will be  not be calculated into your Fico score.Which can lead to a lower Fico score.

Message 5 of 8
Super Contributor

Re: Closing Accounts

Bear in mind that store cards are penalized in the non-FICO models used by the insurance industry.

 

As the other folks have suggested, there are always reasons to close and other reasons to keep open. When a given card falls into both camps, you have to balance the two reasons and decide which is stronger.

 

Reasons to close:

* Dislike the card, would never use it unless you had to, etc.

* Tracking it to prevent fraud is more tiring than it is worth

* Card has an annual or (worse) monthly fee. If you have to buy something that you don't absolutely need once a year to keep it open (common with a store card) consider that an annual fee. Always consider PC-ing a card with an annual fee to a no-AF card before closing.

* Card does not have an Amex, Visa, MC, or Discover logo on it. (Insurance industry penalizes the presence of store cards and gives a heavier penalty still for "auto" accounts, e.g. a Pep Boys or Auto Zone or Firestore card.)

 

Reasons to keep open:

* Closing the card would bring your total number of open cards to four or less.

* It is quite a bit older than most of your other cards. Example: You have seven cards of ages 1, 1, 2, 2, 3, 8, and 9 years. You are considering closing the 8-year old card. Tend to keep it open since it is much older than most of your other cards.

 

If a card does not fall into either camp, tend to keep it open, unless you have a ton of cards already. Then do whatever feels best.

Message 6 of 8
Frequent Contributor

Re: Closing Accounts

Hubby and I both have a Discover card, He has an $8,500 limit and I only have a $1,000 limit. They keep increasing his limit but haven't increased mine at all. I think we have had them less than a year, not 100% for sure but I was thinking of closing mine since I really don't need it or use it since I have better cards with higher limits. So, my question is, if I do close it will it hurt my score even though it is a low limit card? Just wanted some advice before doing anything. Thanks

Chapt 7 BK DC: 9/8/15 New Car Loan 4/27/17 = 2017 Toyota Rav4 LE 9 Miles
Starting Scores: EXP 479/EQ 529/TU 555
Current Scores: EXP 677/EQ 678/TU 695
AAoA 3.5Yrs|Oldest 11.3Yrs|Lowes = $10K |Kays = $2750|FBeauty = $2350|VSecret = $3000|
Overstock = $6600|Kohl's = $3000|COne Quick Silver = $3100|
Discover = $1000|53 = $1500|Barclay = $2500|WFargo = $5500|BofA RCI = $2000|PenFed = $50K
(GARDENING 5/1/18 to ?)
Message 7 of 8
Legendary Contributor

Re: Closing Accounts

Additionally, once a card is closed and paid, the creditor may wish to terminate any continued obligation to monitor the account for any changes that might require updated reporting under FCRA 623(a)(2) or billing statements under the FCBA, or might result in consumer disputes or good-will requests to change some prior reported information.

There are many business reasons why a credtor might wish to delete their entire account once it is closed.

 

A consumer has no control over creditor deletion of an entire reported account, and thus, closing could ultimately result in account deletion long prior to the ultimate removal by the CRA at approx 10 years after closing.

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