Should I keep a credit card if there are better options?

[Moab]

I am a bit torn here. I have an older chase card that offers 3% back on gas and 1% back on everything else. They have since come out with one that offers 5% back on gas and groceries and 1% back on everything else. I would want to change to the new once since it?s pretty much better in every way but I always read that it?s bad to open and close accounts.

If I switch to the new one how much will my credit report be destroyed? It?s not like it?s too bad as it is, I have a score of 650 something (checked a couple days ago by the mortgage guy), don?t have too many open cards, bought a condo, and have never been late on a payment.

Is it worth it to get a new account and then close the old one? Isn?t that bad for your credit as well, it ruins the length of time for the report or something?

 

[kranky]

Some places will let you switch to a different card and keep that credit history, some don't (they close the old account and open a new one).

Call them and ask.

 

[dxkj]

how many CC's do you have?

Just keep both. I have like 8 CC's and it doesnt affect my credit adversely.

edit: Just because you close your account doesnt mean your credit record dissappears, it stays on there and is available until it falls off the end of your 7 year report or whatever.

 

[Tu13erhead]

Whatever you do, keep the old one. It's very good for your credit to have your accounts open for a long time, even if you're not using it. Might be worth it to make a purchase every few months to keep the card active.

 

[azilaga]

Why not ask them to give you the terms of the new card? If not, tell them they'll lose a customer. I've found that to work in lowering my interest rate from Citibank.

 

[MrDudeMan]

Originally posted by: Tu13erhead
Whatever you do, keep the old one. It's very good for your credit to have your accounts open for a long time, even if you're not using it. Might be worth it to make a purchase every few months to keep the card active.

actually, making a purchase every month is a better idea.

i buy everything on my credit cards, but that doesnt mean i buy more than i would have had i not had the credit card. people who think credit cards are evil really come off as being a moron. i get free money from 2 credit card companies on a regular basis, and i had to spend the money anyway! i havent paid any of them a single penny over the last 2 years. someone point of the problem - i beg you.

 

[dullard]

If you are applying for a mortgage (I assume so from your post), whatever you do: DON'T open any new accounts yet. Wait for the mortgage to be completed. 650 isn't much to brag about, so you should be careful.

The 5% isn't much more than 3%, and check if there is a limit that you will hit. It is possible in many cases that you'll get less back by switching if you hit that limit.

And don't close the old card down if you do switch.

 

[dullard]

Originally posted by: MrDudeMan
actually, making a purchase every month is a better idea.

You get a better credit score if at least one card has a $0 average monthly balance. The only way to get a $0 average monthly balance is to have no purchases for 2 straight months on that card. Thus, purchasing something every month on every card is a bad idea. It won't hurt you much, but you'll still get a higher score if you let at least one go 2+ months between purchases.

 

[MrDudeMan]

Originally posted by: dullard

Originally posted by: MrDudeMan
actually, making a purchase every month is a better idea.

You get a better credit score if at least one card has a $0 average monthly balance. The only way to get a $0 average monthly balance is to have no purchases for 2 straight months on that card. Thus, purchasing something every month on every card is a bad idea. It won't hurt you much, but you'll still get a higher score if you let at least one go 2+ months between purchases.

it lowered my score less than 10 points. id rather have the history of on-time payments.

 

[dullard]

Originally posted by: MrDudeMan
it lowered my score less than 10 points. id rather have the history of on-time payments.

Using a card every 3 or so months while using your other cards every month still gives you the exact same history of on time payments.

 

[MrDudeMan]

Originally posted by: dullard

Originally posted by: MrDudeMan
it lowered my score less than 10 points. id rather have the history of on-time payments.

Using a card every 3 or so months while using your other cards every month still gives you the exact same history of on time payments.

not from different companies though. i am looking at my report right now and it has the payment time-table for each card individually laid out and how it is affecting my score.

 

[crownjules]

Originally posted by: Moab
I am a bit torn here. I have an older chase card that offers 3% back on gas and 1% back on everything else. They have since come out with one that offers 5% back on gas and groceries and 1% back on everything else. I would want to change to the new once since it?s pretty much better in every way but I always read that it?s bad to open and close accounts.

If I switch to the new one how much will my credit report be destroyed? It?s not like it?s too bad as it is, I have a score of 650 something (checked a couple days ago by the mortgage guy), don?t have too many open cards, bought a condo, and have never been late on a payment.

Is it worth it to get a new account and then close the old one? Isn?t that bad for your credit as well, it ruins the length of time for the report or something?

Some general tips on having CCs:

- Don't apply for more than a couple every 4-5 months. Each CC you apply to will file for a credit report and this drops your rating a little.
- Never close out old CCs. One thing that credit report scores are based upon is used credit vs total available credit. More CCs = more available credit.
- Obviously, always pay off your CC in full each month and on time.

 

[QED]

Originally posted by: dullard

Originally posted by: MrDudeMan
actually, making a purchase every month is a better idea.

You get a better credit score if at least one card has a $0 average monthly balance. The only way to get a $0 average monthly balance is to have no purchases for 2 straight months on that card. Thus, purchasing something every month on every card is a bad idea. It won't hurt you much, but you'll still get a higher score if you let at least one go 2+ months between purchases.

Where did you get this information from?

I've worked in the finance industry for about 6 years in the past, and this runs somewhat counter to what my experiences have been.

If a card has a zero balance (I mean, truly zero as in it hasn't been used), its overall IMPACT on your credit score is reduced. Afterall-- how hard is it to keep current on a card for which you have no payments?

Also, you get a small boost having a very small balance (somewhere around 2-5% of the credit line amount) over having absolutely no balance whatsoever.

There is also an optimal number of cards which carry a balance-- generally believed to be between 3 and 5. Any fewer and you'll suffer a small penalty for having too few credit lines. Any more and you'll suffer a larger penalty for over use.

 

[Moab]

Originally posted by: dullard
If you are applying for a mortgage (I assume so from your post), whatever you do: DON'T open any new accounts yet. Wait for the mortgage to be completed. 650 isn't much to brag about, so you should be careful.

Well, sort of. I already have my mortgage. Credit when I got it was 750 or something around there. I am just switching my second personal loan I have (to avoid PMI) to a fixed rate instead of a pure variable one.

To answer the other question: I have 4 now. Old Amex Blue I don't use, one from my credit union, the Chase one in question, and some motorcycle specific one that I think I should close because it was just for my bike when I bought it.

Oh, and a store card I used to get a huge soft king sized bed for around 700 bucks.

 

[dullard]

Originally posted by: MathMan
Where did you get this information from?

I'm getting that information from the credit scores. They clearly state what has hurt your score and what has helped. In it, they all state that I would get a better score if one of my cards had a $0 balance (instead of the average $100 balance I have since I pay it off in full each month but I still charge a little on it each month). I also get the information from news sources on how to improve credit scores.

If a card has a zero balance (I mean, truly zero as in it hasn't been used), its overall IMPACT on your credit score is reduced. Afterall-- how hard is it to keep current on a card for which you have no payments?

I think you are misinterpreting my post. I didn't say have a CC that you NEVER use. I simply stated that you need to occasionally show a $0 balance on a card. Have one card that you use but you use it sparingly.