Should i close my credit card?

Discussion in 'Community Discussion' started by silbeej, Mar 17, 2008.

  1. silbeej macrumors 6502a

    Joined:
    Feb 3, 2007
    #1
    Here's the deal, i'm in college, and have a few credit cards. One of which i got last year, but don't use at all. It was when i first applied for a card, and chose two that i thought were good, and ended up getting both, which i thought i would only get approved for one. I don't use it at all, and don't want to worry about it. Should i call up and cancel or just hold on to it?
     
  2. biturbomunkie macrumors 6502a

    Joined:
    Jul 30, 2006
    Location:
    cali
    #2
    hold on to it, keep a small balance (i.e. < 30% of credit line) and pay it off over a few months if you want to raise your credit score.

    even if you have no need to raise your credit score, still hold on to it (unless you are paying service fee or it's a department store card). extra credit cards give you a higher overall credit buffer which makes your credit profile more appealing. you should also ask your bank to raise your credit line (without running a credit check) once in every ~1.5 yrs so that your overall credit line increases.
     
  3. aristobrat macrumors G4

    Joined:
    Oct 14, 2005
    #3
    If you're not paying any yearly fees on it, I'd consider keeping it.

    One of the things that makes up your credit rating is how much of your total credit that you have available.

    For example, if you had a credit limit of $500 on card A and $500 on card B, you have $1000 in total credit.

    If you owe $250 on card A and owe $0 on card B, you owe $250 total.

    $250/$1000 = a debt ratio of 25%

    If you close card B, your total credit drops to $500.

    $250/$500 = a debt ratio of 50%.

    A few years ago, I thought I'd increase my credit score by closing a bunch of unused accounts. I had always heard that having "too much credit" was a bad thing. Turns out my credit score went DOWN because my debt ratio went up with all of the available credit on the accounts I closed disappeared off of my credit report. Ugh. :eek:
     
  4. TEG macrumors 604

    TEG

    Joined:
    Jan 21, 2002
    Location:
    Langley, Washington
    #4
    If it is a no annual fee card, keep it. If you close it, you will reduce your available credit, and therefore your credit score will suffer. If you were smart, you would use is for a small monthly purchase, then pay it off in full each month.

    TEG
     
  5. pianoman macrumors 68000

    pianoman

    Joined:
    May 31, 2006
    #5
    i echo what others have said. unless you're paying an annual fee, keep the card and use it to help build credit. a good way to do that would be to designate it for something specific, such as gas or groceries. whatever you use a credit card for, make sure you pay it off in full each month.
     
  6. CalBoy macrumors 604

    CalBoy

    Joined:
    May 21, 2007
    #6
    I agree that he should keep the card, but I don't agree with having a balance on it. It's pointless interest payments that will only give him a few extra points on his credit score (if any, since the debt:credit ratio is a factor).

    OP, keep the card so that you have a higher amount of "available credit" which is important for your net FICO. As long as there are no fees, keeping the card active can only be beneficial (again, if there are no fees).
     
  7. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #7
    Agreed there. Carrying the balance is NOT a good idea. Credit cards are one of the worse ways to build credit. Better ways to build credit is pay rent and bills. Loans are another good way. Personally I find rent and bills on time being the best way.

    Credit cards are known as revolving credit. It means that most people pay them off every month.

    If you plan on having a balance do not use the cards to pay anything that is a fixed cost (food, gas and bills).

    I personally believe in treating credit cards like a charge card. That is pay them off in full every month.

    2ndly I would keep both cards. Have one as a primary and one as a back up because some times one of the cards will get frozen by security if something glitches so having the back up card helps out a lot in this plastic world. In my case my primary card is not always accepted because it is a AMEX so I have a visa has my back up card.
     
  8. joeshell383 macrumors 6502a

    Joined:
    Sep 18, 2006
    #8
    Closing revolving credit accounts (credit cards) negatively impacts your FICO score (credit score). I would definitely keep it.
     
  9. Markleshark macrumors 603

    Markleshark

    Joined:
    Aug 15, 2006
    Location:
    Carlisle, Up Norf!
    #9
    I find they're handy to have, just for emergencies, keep a hold of it.
     
  10. silbeej thread starter macrumors 6502a

    Joined:
    Feb 3, 2007
    #10
    I do pay off in full every month. I got an AMEX blue cash, and would have gone for the green card if there was no annual fee because i treat all my cards as charge cards, so APR is no worry to me.
     
  11. ntrigue macrumors 68040

    ntrigue

    Joined:
    Jul 30, 2007
    #11
    Generally accepted number of cards is 3-5. As stated above the revolving balances are seen as a ratio to available credit so keeping this card could result in decreasing this utilization ratio by 30%.

    Furthermore, the first credit card is responsible for putting you on the credit map. No reason to mess with this built history for at least 5 years. You will likely find that they will never be hugely generous with with this Class C credit card's credit limit. In the future applying for a Class A will instantly award you a many times greater credit limit than you would ever get with your first card; at this junction you would cancel it.
     
  12. ucfgrad93 macrumors P6

    ucfgrad93

    Joined:
    Aug 17, 2007
    Location:
    Colorado
    #12
    Guess I'll buck the trend and say close it. If you are not using it, why keep it? As others have said, there are better ways to build your credit score.
     
  13. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #13
    how many credit cards do you have. 2-3 is really the number I seem to see most off as a good amount to have. More than that it starts becoming a good idea to start closing the accountsl.

    if you primary card is AMEX you need a 2nd card as a back up because a lot of places do not accepted AMEX.


    btw I have the same AMEX as you. Cash back seem to be the best way to go.
     
  14. silbeej thread starter macrumors 6502a

    Joined:
    Feb 3, 2007
    #14
    Oh yeah, i've got the AMEX, and then a VISA, i was just wondering if i should cancel my crappy original VISA, but i think i'll just put it somewhere and use teh extra credit to help my ratio.

    Thanks all
     

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