Cancel unused cards?

[Clancaster23]

If some reading this may have read my other post about figuring out what to do about a potential bankruptcy or at the very least going through a debt relief program to make it easier to pay bills month to month, I am looking to save every dollar I can to avoid all that.  Right now my score according to Experian is 720.

Right now I have 11 cards active.  All in good standing.  Six of these I have zero balance on.  Those being a Capital One, Fortiva, two Credit One, Milestone and a Citi.  The Capital One and Citi charge no annual fees so I want to keep those.  The two Credit One cards, one charges me $8.25 a month for the annual fee and the other which I have never used is about to charge me $95 in the middle of this month according to the statement.  The Fortiva charges me $15 a month.  The Milestone recently upped their fee to $19.25.

Despite being current on them all, I don't need them and obivously have no plans to use them and I keep giving them money to have it.  I figure roughly $50 a month I'd save not having them.  I know it will take a hit on my score but I'm not really concerned about that at the moment considering it would help my financial situation a little bit and the score will recover over time.  I've had them all for several years so with that credit history I'd also be losing a total of around $4,000 in "available credit"  but again, not really concerned with it at the moment.  Should I cancel these cards and take the score hit?  I'm thinking the answer is yes, just need someone to tell me so.

[Casper476]

When you close an account, it stays on your credit report for 10 years if it's in good standing at time of closure. So it's always a good idea to close out any annual fee credit cards where you can't justify the annual fee. 

[Rogue46]

I would cancel the subprime cards they really aren't helping you. If you don't carry a balance you won't take a utilization hit but depending on the aging of those cards you might see a decrease in score but like @Casper476 mentioned they will stay on your reports for up to 10 years

[salt_water_swimming]

Absolutely close the monthly fee cards. Those are only for people who can't get a card anywhere else and need to build credit.

The only potential downside would be a hit on utilization. Since these cards have 0 balance, your total limit will fall while your reported total balances won't. You should run the math on your new utilization to prepare yourself for the credit hit that might cause. But it's definitely still going to be better than paying $50 /month for cards you don't use, and way better than defaulting/bankruptcy.

You should also look at one or more new cards with 0% introductory APRs while your scores are still good. This would allow you to float some expenses while you sort out your finances. They will often have lower monthly payments than cards actively charging interest. You can often balance transfer directly to your bank account for cash only expenses too.

[Pppoolboy]

As a bankruptcy attorney of 17 years I can tell you that it's almost assured that, if you file for BK, all your cards will be shut down anyway so trying to save any of them is pointless.  I don't know your situation but at this point all you should be worrying about -- if you want to avoid BK -- is to curtail your spending as much as possible.  This probably means you'll want to stop paying any outstanding CC balances, like, right now.  If those balances are high enough you will be sued in a couple of years.  However, once sued you can negotiate a pay-for-delete if you haven't filed for BK already. 

Obviously there are a WHOLE lot of caveats to this, so if you're even thinking about BK you probably want to talk with your friendly neighborhood bankruptcy attorney WELL IN ADVANCE so he can give you some (free) advice moving forward.

About 50% of the folks who call me never end up filing for BK but I'm happy to give them a (free) 15-20 minute chat to let them know what their options are and what I recommend. Keep in mind that attorneys have a fiduciary duty to you and cannot recommend you use their services if you don't actually need those services.  I'm totally cool with telling people that they don't need my services and that they should instead do X Y and Z.

Oh, also... debt relief programs rarely work.  Probably a third of my clients have wasted money with debt consolidation before they end up BKing.  Debt consolidators skim off too much money to make an impact on your debts and you end up doing nothing more than enriching the debt consolidators. Just saying...

[IcyCool7227]

I agree with the others. Cancel those fee sucking cards! An annual fee card is only good if there are prime benefits (like travel credits, extra cashback and the like) that give you lots of value if you spend enough rather than just being a card for people with bad credit which you don't have. You're wasting your money on nothing substantially beneficial. I would have closed them off a long time ago. Keep the ones you want to keep like Capital One. C1 can give extra cashback through their offer portal so that's why I'm keeping mine.

[TrapLine]

In cancelling cards, pay attention to age and loss of credit limits.

Speaking with experience, I have been closing cards and some of the old ones dropped off the credit bureau in one to two years (usually more towards ten years) and it hit my scores hard. Also, the loss of credit limits could affect DTI.

FNBO has dropped from the credit bureaus in as little as two years and Capital One around eight. Varies but a "heads up" on caution.

[Varsity_Lu]

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@Casper476 wrote:

When you close an account, it stays on your credit report for 10 years if it's in good standing at time of closure. So it's always a good idea to close out any annual fee credit cards where you can't justify the annual fee. 

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^

This. I still have some Synch accounts reporting that have been closed since 2015 and 2017. They were opened in 2003 and 2014 and it's the opening dates that are helping my score. The 2003 account is reporting as 21+ years for me. Closing it won't necessarily drop your score. If you can save 50 bucks a month on fees, do it. Especially if you aren't using the cards.

[BudC2]

Listen to the BK attorney above! Also close all AF cards and worry about keeping your oldest no AF card to help preserve age of accounts. At this point credit score is the least of your concerns. Remember that BK stays on your report for 10 years. It hurts badly for the first couple and then slowly diminishes however if you have reaffirmed accounts like mortgage or Equity Line of Credit that can affect you even after that 10 years. I can't get a CLI from Citi because of the reaffirmed account situation. Even though the BK may be removed from your credit report there are other ways lenders can hold old issues against you. Citi is the first and only one so far that has done this to me but creditors are not as stupid as we want them to be sometimes.

[alocksley]

I may be off base here, but if you're thinking of going into a debt reduction or a bankruptcy situation do you really care what your score is? Seems to me if you do either of those programs you're score is going to suffer anyway. I'd agree with all the others to get rid of the cards that you're paying for, and maybe take a look at what the APR's are for the ones that remain to see which would generate the least burden. In any case, good luck.