Closing Secured Cards

[Gardenhand]

Hello---just picked up two new credit cards to replace two secured cards. I got a discover it and an Amex BCE. I'm wondering what the best time to close my secured cards is. For some reason I think keeping them open until they are two years will squeeze the most points out of them? Not sure where I heard that. Getting the deposits back is not a huge issue. SDFCU has no annual fee but Open Sky does---due in September. Is there any bennifit keeping them open longer or should I just pull them off like a band aid? I'm already expecting another drop in scores when the two new cards report because of the aaoa going down and the new credit factor. Anyone have any idea how bad it should be? I already saw a drop on EQ and EX due to the INQs.

Before I had three cards:
TD Cash Rewards-2500 opened March 2014-started as a secured card but then graduated.

SDFCU-500 secured- opened March 2014
Open Sky Secured-300-opened September 2014

Couple secured loans:
SDFCU-1,000-April 2014- about 50 percent balance left-3 year loan.
Alliant-500-September 2014- I've prepaid this one down to about 40 percent balance remaining- 5 year loan.

EX-7 INQs past 12 months-was a 750 now a 742 after the new INQ
EQ-7 INQs past 12 months-was a 735 now a 730 after the new INQ
TU-6 INQs past 12 months-741

[Anonymous]

Hello Gardenhand!  Congrats on continuing to take steps toward where you want to be.

Sounds like you have five cards right now, two of them very recent (Discover and and Amex) and two of them older secured cards that you are planning to close at some point.

You write "Getting the deposits back is not a huge issue."  I am understanding that to mean that you don't need the money back and don't have a problem allowing it to stay as security if there might be any advantage to keeping the cards open.

My feeling is that you could close both accounts in April and get your money back.  That's simple, and it prevents you from paying a charge again for the OpenSky.  Closing next year rather than right now will give you (ten years from now) an extra six months that they will contribute be contributing to your AAoA as 12 year old accounts.  A mildly nice to have.  Or you can close them both now.

As far as the AAoA hit, it looks like you are going from > 1 year to < 1 year.  But then maybe three months later you will be back up to > 1 year again.  So I wouldn't worry about it.

[Gardenhand]

Yes you are correct in your assumption---I'm not in a rush to get my deposits back if there would be a bennifit in leaving the cards open longer. I understand now that there would be a bennifit ten years from now. However in April I could revisit the idea of closing the cards and basically have the same thought process as now---could leave them open until September before the annual fee hits and in ten years get a few more months of reporting out of them. My feeling is that ten years from now my scores and financial situation should be solid enough to weather the cards dropping off. 

At this point I'm not going to make an immediate decision and I'm just going to leave them open for now. Thank you for the thoughts.

[Anonymous]

You are welcome and good luck!

[takeshi74]

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@Gardenhand wrote:

For some reason I think keeping them open until they are two years will squeeze the most points out of them?

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People suggest that in case of manual review.  I don't know of any scoring benefit.  See the Closing Credit Cards thread in the Helpful Threads sticky in the Credit Cards subforum.

[Anonymous]

If you keep your two accounts open till April, then one of them will have crossed the 2 year mark.  For the other one to cross the two year mark, you'd need to pay another big annual fee, which you correctly judged would be a bad idea. 

As Takeshi says, there is no benefit to your score to close an account at 1.5 months vs. 2.1 months.  (Except the very slight advantage to your AAoA that would happen ten years from now.)  Even if there's a manual review advantage it would not be worth paying that annual fee for.

Takeshi is always right about checking the stickies for advice,  Good luck!