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Does closing Apple credit card hurt me?

I

iluvifone

macrumors 6502
Original poster
Jun 28, 2010
281
0
-i live in Ontario, Canada
-was running low on cash last month, but desperately needed new macbook when old one died.
-total came to about 1400 USD. i only had about 900 that i could use for the laptop at the time, so I applied for the 'apple financial services' thing on their website, and got approved
-purchased laptop.. also got the bill statement in the mail.. says i have 90 days, no interest, to pay it off
-went to the bank today.. paid the entire thing off

1) Can I close the account now? I have no intention of using it ever again, unless it gets me special offers or lower prices by using it. I'm worried that opening and closing an account in such a short time span would hurt my credit score... anyone?

2) Can I actually use this card to get 90 days, no interest, on any purchase at any store, or is it exclusively for use at apple.ca only?

thanks!
 
iluvifone said:
-i live in Ontario, Canada
-was running low on cash last month, but desperately needed new macbook when old one died.
-total came to about 1400 USD. i only had about 900 that i could use for the laptop at the time, so I applied for the 'apple financial services' thing on their website, and got approved
-purchased laptop.. also got the bill statement in the mail.. says i have 90 days, no interest, to pay it off
-went to the bank today.. paid the entire thing off

1) Can I close the account now? I have no intention of using it ever again, unless it gets me special offers or lower prices by using it. I'm worried that opening and closing an account in such a short time span would hurt my credit score... anyone?

2) Can I actually use this card to get 90 days, no interest, on any purchase at any store, or is it exclusively for use at apple.ca only?

thanks!
Click to expand...

part of the FICO (don't know if they use that in Canada) score is the average length of account (so it may help in this case to close it).

however, another part is the ratio of used to available credit. maybe having the card open but empty would be better than closed.

http://en.wikipedia.org/wiki/FICO_score#FICO_score_and_others
 
I agree, it's not hurting you to keep it open. I have a Bank of America card that I have used once to make a large purchase on Amazon...Got it for the increased protection and not the credit, so I payed it off the same month.

I have never used it since, but they keep increasing my credit limit (I suppose in the hope that I will cave and buy something with it) It sits in my wallet along with my Amex, rarely used, but I keep them open.
 
Keep it open.

However, don't forget about, if you put something small on the account every month or two then the account will remain marked "active" and it will remain in the FICO scoring equation. This will tend to help your score to some small amount.

This is, of course, if you're concerned about your score, which you should be.
 
Credit scores aside, if you don't want or need the facility then you should close it.

As a one-off occurrence, it's not going to have any lasting impact on your score.

If you start regularly opening credit and then rapidly paying it off then that might be a different matter.
 
maflynn said:
I'd vote to close it, if you don't need it.
Click to expand...

There are reasons to keep it open. Part of your credit score is determined by the percentage of total credit available you have used.

So let's say you have 3 cards, each with $100 credit limit. You have $100 charged. That's using 33% of your total available credit. Now you decide to close one card because you hardly use it. Now your available credit is $200, and your $100 usage now amounts to 50% of available credit used. That will effect your credit score (at least it will in the States).

So unless there is some strong reason to dump a credit card (e.g. annual fees, compulsive shopping), it is probably better to keep the card open and not use it.

One further point - many CC companies will close your account if you don't use them for some period of time (1 year, 2 years). So use the card for one small purchase a year to keep it open. From your credit rating point of view, having the CC company close your account looks bad and negatively effects your score. If a card is to be closed, it looks better if it it closed by the account holder.
 
If there is some sort of yearly fee then I'd suggest closing it immediately.

I'd say keep it open if it's a significant part of your total available credit. If it isn't and you don't feel comfortable keeping it around (i.e.- it'd be too tempting to get the latest Apple products when not needed) then close it.

I wouldn't suggest spending small amounts on it just to keep it active. This thought process usually yields bad results.
 
section31 said:
If there is some sort of yearly fee then I'd suggest closing it immediately.

I'd say keep it open if it's a significant part of your total available credit. If it isn't and you don't feel comfortable keeping it around (i.e.- it'd be too tempting to get the latest Apple products when not needed) then close it.

I wouldn't suggest spending small amounts on it just to keep it active. This thought process usually yields bad results.
Click to expand...

Just curious, what bad results might this yield? I wasn't aware that making the infrequent small charge had a negative aspect. (See my post above)

Serious question, if there are negative consequences, it would be very useful for me to understand them.

Thanks...:D
 
Shrink said:
Just curious, what bad results might this yield? I wasn't aware that making the infrequent small charge had a negative aspect. (See my post above)

Serious question, if there are negative consequences, it would be very useful for me to understand them.

Thanks...:D
Click to expand...

The negative consequences I mentioned were not FICO score calculation concerns but more of a mindset/sociological aspect of spending habits.

Spending a little here and there just for the benefit of keeping up one's FICO score would most likely lead to the purchase of unneeded items; at the Apple store we all know this could even lead to some big purchase items. There are myriad ways to use that money to better one's situation from a personal finance perspective.
 
section31 said:
The negative consequences I mentioned were not FICO score calculation concerns but more of a mindset/sociological aspect of spending habits.

Spending a little here and there just for the benefit of keeping up one's FICO score would most likely lead to the purchase of unneeded items; at the Apple store we all know this could even lead to some big purchase items. There are myriad ways to use that money to better one's situation from a personal finance perspective.
Click to expand...

Thanks for your reply- interesting points. I was looking at the issue strictly from the FICO score standpoint, not from a "psychological" perspective.

Interesting considering my profession!:p :D
 
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Also, making a small purchase on a cc and then forgetting to pay. A pack of gum gets real expensive with a late fee!
 
Shrink said:
There are reasons to keep it open. Part of your credit score is determined by the percentage of total credit available you have used.

So let's say you have 3 cards, each with $100 credit limit. You have $100 charged. That's using 33% of your total available credit. Now you decide to close one card because you hardly use it. Now your available credit is $200, and your $100 usage now amounts to 50% of available credit used. That will effect your credit score (at least it will in the States).

So unless there is some strong reason to dump a credit card (e.g. annual fees, compulsive shopping), it is probably better to keep the card open and not use it.

One further point - many CC companies will close your account if you don't use them for some period of time (1 year, 2 years). So use the card for one small purchase a year to keep it open. From your credit rating point of view, having the CC company close your account looks bad and negatively effects your score. If a card is to be closed, it looks better if it it closed by the account holder.
Click to expand...

Mostly this. Having an active card with a full available balance will theoretically help you credit score more than not having it. If you can manage to keep it open with a zero balance and just "forget" about it while making sure you don't get hit by an annual use fee or something would be best. That available credit is a big part of your score. However, avoiding the risk and self managing is also equally critical. Do whatever you're comfortable with.
 
Some lenders will look to see how much available unsecured credit you have and actually deny you more lines of credit based on the theory that you could fill those up and then be unable to pay them back.
 
Barclay's card? Close it. Go get another credit card with a lower interest rate and no annual fee. Let it give you perks like airline miles or something else.
 
Shrink said:
So let's say you have 3 cards, each with $100 credit limit. You have $100 charged. That's using 33% of your total available credit. Now you decide to close one card because you hardly use it. Now your available credit is $200, and your $100 usage now amounts to 50% of available credit used. That will effect your credit score (at least it will in the States).
Click to expand...


Yes, but I thought having more credit cards, or more available credit that you can borrow from, would also lower your ability to take on a big loan in the future. When you're assessed on your suitability for a loan, a bank may treat your available credit as a type of "loan", even if you haven't used it.

For example, if you had a spending limit of $20,000 on your credit card, but you only owed $500 on your credit card, you'd still have $19500 available on that card. The bank knows that you only owe $500. However, you'd still be a risky customer because the bank sees the $20000 spending limit as a loan already given to you. Potentially, you could go out tomorrow and max out your credit card, and which would instantly compromise your ability to pay off the loan you're applying for.

It's not how much you owe that's the problem to a bank. It's your potential to become instantly in debt by $20,000 that's the problem. The $20000 may be seen as an ongoing loan.


I could be wrong though, or it may work differently in your country/state.


Anyway, if you don't need a credit card, you should close it.
 
maflynn said:
I'd vote to close it, if you don't need it.
Click to expand...

I vote close it as well. The limited amount of help it could do (and by limited I mean maybe a point or 2) is not worth the risk that you might charge something to it.

Also having a lot of lines of credit open from CC hurt your score and not help. Big time if they are score/company cards. One should really only have 2-3 credit cards in their name total. (Primary, backup and then a 3rd card that not really carried and used for emergencies)
Also Credit cards are considered insecure debt and sometimes having the a lot of insecure debt open to you can hurt.
 
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