Results 1 to 11 of 11

Thread: Cancelling a Card

  1. #1
    Featured Member MadisonM's Avatar
    Joined
    Oct 2005
    Location
    Wisconsin
    Posts
    1,424
    Thanks
    0
    Thanked 10 Times in 8 Posts

    Default Cancelling a Card

    Ok I've decided that I'm going to get a loan from my credit union to pay off my credit cards. The average interest rate on my credit cards is about 21%, and with the loan I'm going to get, the interest (if my dad cosigns for me, which he said he will do) is going to be between 5-7% depending on his credit score. So I'll have all my debt taken care of in one year (my loan will be about $400 a month for one year). The credit union is going to send payment directly to the credit card companies for me, so I won't be handling any of the loan money myself.

    Ok, here's my question. I don't want to use my credit cards anymore. I have 4 major credit cards (First Financial Bank, Citibank, Chase, American Express) and a bunch of store cards (Younkers, Victorias Secret, JC Penney, American Eagle, etc). I want to keep the Victorias Secret card, but the rest I don't plan on using anymore. I also want to keep one of my major cards for emergencies and travel, but the rest I don't want. If I cancel all these cards, will that impact my credit score? Or would I be better off just keeping them and putting them somewhere safe where no one will find them? I have no problems not using credit cards- I haven't used any of them in at least 4 months- I always use cash or my debit card/checks for everything now and I only buy what I can afford to pay for right away now, so wanting to get rid of the cards isn't about trying to get rid of temptation, because there is no temptation to use them. I just don't really want them laying around if I don't need them. What would be best for me to do?
    Take the road less traveled- just make sure you have a map.

  2. #2
    God/dess Emily's Avatar
    Joined
    Feb 2003
    Location
    Las Vegas
    Posts
    11,302
    Thanks
    4
    Thanked 143 Times in 72 Posts

    Default Re: Cancelling a Card

    having extra open lines of credit hurts your score, so yes, closing them will help. Plus you don't have to worry about someone stealing them and using them.

  3. #3
    Veteran Member azcustomer's Avatar
    Joined
    Jan 2006
    Location
    Phoenix, AZ
    Posts
    676
    Thanks
    0
    Thanked 3 Times in 3 Posts

    Default Re: Cancelling a Card

    The answer is not an easy one.

    Credit companies love people who have more credit than they can use. What they like to see is someone who keeps credit cards active and using them. What they don't like to see is someone who quickly builds up a base of credit cards. This is a red light for someone who anticipates going into serious debt.


    "Life is not about the number of breaths you take.
    It's about those moments which leave you breathless."

  4. #4
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Cancelling a Card

    cancel all but two of your credit cards, keeping them open for 'emergencies'. The reasons to keep 2 cards is potential identity theft (which would force you to close one card instantly). These two cards should be from the major banks and probably from different credit card companies (like one Master and one Visa) just in case one of the companies/banks is hacked.

  5. #5
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Cancelling a Card

    Keep the cards you have had longest open. Recently long standing credit has been considered in credit scoring.

    The percentage of availabe credit is important as well. For example if you have a credit cards maxed out at $1000 you have no availabe credit which is bad. If you have a $1000 balence on cards with a total credit limit of $2000 you have 50% available credit.

    Considering these two factors choose wisely which cards to keep and which cards to cancel.

  6. #6
    God/dess
    Joined
    Jul 2004
    Location
    Temporary Lurkmode...
    Posts
    12,609
    Thanks
    0
    Thanked 79 Times in 35 Posts

    Default Re: Cancelling a Card

    This is great advice as I have been considering cancelling my low limit high interest card for a few months. I have another thats much higher and with over 1/2 as much interest as the old one.
    you live like an ivy vine
    you can only survive by clinging onto trees
    that's your flaw
    put down some roots so you can stand on your own
    -Kenpachi



  7. #7
    Featured Member MadisonM's Avatar
    Joined
    Oct 2005
    Location
    Wisconsin
    Posts
    1,424
    Thanks
    0
    Thanked 10 Times in 8 Posts

    Default Re: Cancelling a Card

    The card I want to keep is the card I've had open the longest (and also has the highest limit), but will it lower my credit score at all if suddenly I'm closing all my accounts? I'm trying to raise my score, which is why I'm going to pay off all my cards (because my score is low because of my high debt to limit ratio (I think that's what it's called- none of my cards are maxed out, but a couple are close). So I'm taking out the loan to pay off all my cards, but should I cancel all my cards all at once, or kind of space it out over a few months- like cancel 1 or 2 cards a month?
    Take the road less traveled- just make sure you have a map.

  8. #8
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: Cancelling a Card

    Quote Originally Posted by TigersMilk
    This is great advice as I have been considering cancelling my low limit high interest card for a few months. I have another thats much higher and with over 1/2 as much interest as the old one.

    Low limit high interest cards are junk - like buying bad shoes.

  9. #9
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: Cancelling a Card

    Just to be on the safe side i would slowly cancel them out.

    Keep in mind getting this loan to pay off your cards will not change your debit to income ratio. The loan for the total amount will still show up on the report and favored into the debit to income ratio. After you have payed down the loan, then your debt to income ratio will be lower. The loan, if it is an installment loan, will not count in your credit availability percentage either. Closed end loans never do. Only lines of credit are factored into your percentage of available credit.

    It might take some time but no matter how you do it this will raise your credit score.

    Keep in mind credit inquiries will lower your score as well for a short time. Anytime you give out personal information to anyone that might be able to pull a credit report, ask if they are. Store discounts when applying for a store card can drive down your score with that credit pull.

  10. #10
    God/dess VenusGoddess's Avatar
    Joined
    Oct 2003
    Location
    Home
    Posts
    13,598
    Thanks
    0
    Thanked 28 Times in 23 Posts

    Default Re: Cancelling a Card

    Quote Originally Posted by Vamp
    Just to be on the safe side i would slowly cancel them out.
    I totally agree. Creditors get just as nervous when you have account opening flurries as when you have account closing flurries. Remember when dealing with creditors...always m-o-v-e v-e-r-y s-l-o-w-l-y.

    Keep in mind getting this loan to pay off your cards will not change your debit to income ratio. The loan for the total amount will still show up on the report and favored into the debit to income ratio. After you have payed down the loan, then your debt to income ratio will be lower. The loan, if it is an installment loan, will not count in your credit availability percentage either. Closed end loans never do. Only lines of credit are factored into your percentage of available credit.
    It doesn't impact your "credit worthiness" but it still affects your credit. It may pull down your score temporarily if the credit cards report a balance before they report your balances being paid off. About 1 month after you pay all of the cards off...you should check your report to make sure that the cards are reporting properly. Also, as soon as you get any kind of new loan, it will always impact your score negatively (new tradelines) and will go back up after 1-3 months of on-time payments and accurate credit reporting.

    It might take some time but no matter how you do it this will raise your credit score.
    Yep. Just don't be alarmed if you see your score dip a bit for a while...it's the nature of the game.

    Keep in mind credit inquiries will lower your score as well for a short time. Anytime you give out personal information to anyone that might be able to pull a credit report, ask if they are. Store discounts when applying for a store card can drive down your score with that credit pull.
    It doesn't usually drive your score down unless you EXCEED 3 inquiries in month's time period. If you apply for 10 cards in one month...it'll negatively impact your score pretty heavily. And, NEVER give out personal information unless you are absolutely sure you want them to pull your credit score. I did this, once, a long time ago...and the place pulled my credit 3 times. Now, if I am not absolutely sure I want something that they need all of my personal info on...I won't give any of my personal info.

  11. #11
    Featured Member MadisonM's Avatar
    Joined
    Oct 2005
    Location
    Wisconsin
    Posts
    1,424
    Thanks
    0
    Thanked 10 Times in 8 Posts

    Default Re: Cancelling a Card

    Thanks for all the info!!!
    Take the road less traveled- just make sure you have a map.

Similar Threads

  1. Cancelling Strip and Grow Rich Membership!?
    By PhoebesMeow in forum Stripping (was Stripping General)
    Replies: 7
    Last Post: 12-06-2011, 07:45 PM
  2. Replies: 1
    Last Post: 05-02-2011, 11:34 AM
  3. Those bums are cancelling stargate sg-1!
    By Deogol in forum The Lounge
    Replies: 0
    Last Post: 09-06-2006, 06:33 AM
  4. Cancelling AOL
    By Deogol in forum The Lounge
    Replies: 29
    Last Post: 07-02-2006, 09:02 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •