Implications of closing a credit card account?

[owlface]

Is it possible to close a credit card without an outstanding balance? Are there any implications of doing this, possibly on one's credit?

 

[Special K]

Your credit score will most likely drop because a component of your credit score is related to the average age of your active accounts.

 

[Deeko]

Yea...if you have balances on other cards, this makes your total debt/credit ratio worse and lowers your score. Also, if you have a short (like, less than 10 years I think) history, and this is an older card, that hurts you too.

 

[datalink7]

What if you have zero debt? I recently paid off all my credit cards and am about 2 months from paying off the rest of my car and student loans and was thinking about canceling one card (I'd still have two left).

 

[Special K]

Originally posted by: datalink7
What if you have zero debt? I recently paid off all my credit cards and am about 2 months from paying off the rest of my car and student loans and was thinking about canceling one card (I'd still have two left).

Your score will still drop because a portion of your FICO is based on the average age of all your active accounts.

There is no reason to cancel a card unless they are charging you a yearly fee.

 

[Juddog]

What if you have a long standing card but is annoying as hell as far as annual fees. I have a card from 8 years ago that I paid off but has an annual $52 fee. I'm debating whether to keep it open for my credit or continue paying the stupid fee.

 

[dullard]

New credit scoring methods were to start this spring. One major change: if you ever use more than 10% of your available credit, then your credit score is harmed. The cutoff used to be 50%; but it was lowered significantly.

A typical person can easilly spend $1000 in a month on a CC. Even if he/she paid it off in full, the credit score will fail drastically if the total available credit is under $10,000. Or if that person once goes up to $3000 with a one time big purchase, then he/she needs $30,000 in available credit to avoid this credit score hit.

Keep that change in mind when you close your credit card account. Because you will be lowering your total available credit. Compare the maximum you will likely spend in a month to the total available credit. If the number is greater than 10%, don't close the account.

 

[edro]

How long has the account been open?

 

[Chiropteran]

Originally posted by: dullard
One major change: if you ever use more than 10% of your available credit, then your credit score is harmed.

Who are the ad wizards that came up with that one?

 

[datalink7]

Originally posted by: dullard
New credit scoring methods were to start this spring. One major change: if you ever use more than 10% of your available credit, then your credit score is harmed. The cutoff used to be 50%; but it was lowered significantly.

A typical person can easilly spend $1000 in a month on a CC. Even if he/she paid it off in full, the credit score will fail drastically if the total available credit is under $10,000. Or if that person once goes up to $3000 with a one time big purchase, then he/she needs $30,000 in available credit to avoid this credit score hit.

Keep that change in mind when you close your credit card account. Because you will be lowering your total available credit. Compare the maximum you will likely spend in a month to the total available credit. If the number is greater than 10%, don't close the account.

Wow that sucks. Guess I'll be keeping it opened. Last month I put $3000 on my credit card, and paid it all off at the end of the month. Normally I won't spend that much on my credit card but I just happened to last month. I have about $18,000 available credit.