bad to cancel a retail credit card to get a different one?

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bad to cancel a retail credit card to get a different one?

Postby icedtea » Sun Dec 09, 2012 12:50 pm

I've read that if you cancel a credit card, you lose your history for that card, and that hurts your credit score. I have a Macy's credit card. I've had it for probably 4.5 years now. I've only used it three or four times total. I don't shop there much - I thought I would when I got the card - and they don't offer any discounts or special deals for cardholders. It's a crummy retail card. Would it be a bad idea to cancel the card in order to get another with good benefits that I'd take advantage of?

I've read it's good to have just one retail card, not two. I also have two regular cards, a Visa and an AmEx. The Visa is my main card. I only use the AmEx to pay my gym membership each month, just to keep up the history.

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Re: bad to cancel a retail credit card to get a different on

Postby Default User BR » Sun Dec 09, 2012 1:10 pm

Why cancel it? Just get the new one and keep the old. You might get benefit from better debt to credit ratio by having more credit lines.


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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Sun Dec 09, 2012 1:30 pm

icedtea wrote:I've read that if you cancel a credit card, you lose your history for that card, and that hurts your credit score. I have a Macy's credit card. I've had it for probably 4.5 years now. I've only used it three or four times total. I don't shop there much - I thought I would when I got the card - and they don't offer any discounts or special deals for cardholders.

Didn't you get your Friends and Family 25% discount card at the end of November? I used mine for the five days it was applicable. Although it said it was good for only a single purchase, every time I used it the clerk gave it back to me. One clerk just rang up the 25% discount without me showing the card. I bought outfits for my granddaughters: original price $59.50; sale price $29.75 (50% off); after 25% off the sale price $22.31 (as just one example).

I get either 15% or 20% off coupons and $10 off if you spend $25 or $30 coupons all the time in the mail. Have you moved?

P.S. I am speaking of the store card; if you have a branded credit card, that is something different.
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Re: bad to cancel a retail credit card to get a different on

Postby dailybagel » Sun Dec 09, 2012 1:34 pm

I suggest you cancel. The credit history won't disappear. It will just stop growing. In seven years it will drop off your credit report, whereas if you keep it open indefinitely, it will stay on, of course.
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Re: bad to cancel a retail credit card to get a different on

Postby tfb » Sun Dec 09, 2012 1:56 pm

icedtea wrote:I've read that if you cancel a credit card, you lose your history for that card

Not true. The history stays on for many years.
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Re: bad to cancel a retail credit card to get a different on

Postby zvez » Sun Dec 09, 2012 2:00 pm

have open lines of credit, doesn't that limit the loan amounts you can take out?

Over the years I've cancelled numerous cards no longer in use, they do stay on for years (maybe 7?) When you as the cardholder cancel they make a notation "cancelled at cardholders request" so it won't be viewed as a negative.
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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Sun Dec 09, 2012 2:09 pm

dailybagel wrote:I suggest you cancel. The credit history won't disappear. It will just stop growing. In seven years it will drop off your credit report, whereas if you keep it open indefinitely, it will stay on, of course.

And the difference is? If it makes no difference, why cancel? Actually, there is a difference. My credit limit on my Macy's card shows up on my credit reports. All my closed accounts show credit limits of $0. My debt to credit ratio is 1% (after rounding) so the reduction in credit limits doesn't mean much to me, but that may not be the case for the OP.
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Re: bad to cancel a retail credit card to get a different on

Postby steadyeddy » Sun Dec 09, 2012 2:19 pm

Wait, are you all saying that it doesn't hurt your credit score to cancel your longest-open card? I was told that having one card open 7+ years was a requirement for the highest credit score. Why are the FICO formulas so opaque? Wouldn't it benefit lenders to clearly articulate how they expect consumers to use credit?
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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Sun Dec 09, 2012 2:22 pm

steadyeddy wrote:Wait, are you all saying that it doesn't hurt your credit score to cancel your longest-open card?

Not me all (and not Brian all either), but not for the reason you seem to be attributing to others.
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Re: bad to cancel a retail credit card to get a different on

Postby tetractys » Sun Dec 09, 2012 2:28 pm

Simply stop using it or destroy it. There's no need to make a formal cancelation in such case. In a short period of time it will become invalid and there will be no effect to your credit. I believe this is the best method of killing no fee cards. -- Tet
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Re: bad to cancel a retail credit card to get a different on

Postby Archie Sinclair » Sun Dec 09, 2012 2:34 pm

steadyeddy wrote:Wait, are you all saying that it doesn't hurt your credit score to cancel your longest-open card? I was told that having one card open 7+ years was a requirement for the highest credit score. Why are the FICO formulas so opaque? Wouldn't it benefit lenders to clearly articulate how they expect consumers to use credit?

Not hurting a credit score is different from helping a credit score. Keeping accounts open can help to increase the score over time.

The scoring system is opaque (1) because FICO is a private company and needs to make money selling its formula and (2) very detailed information could help someone to game the system. FICO is trying to test whether you are a good credit risk, not whether you are good at jumping through hoops created by FICO.
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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Sun Dec 09, 2012 2:40 pm

tetractys wrote:Simply stop using it or destroy it. There's no need to make a formal cancelation in such case. In a short period of time it will become invalid and there will be no effect to your credit. I believe this is the best method of killing no fee cards. -- Tet

My oldest card is from 1982, my CPU/CITIBANKCBSDNA (yes I know what it really is). I use it about once every two years, so "a short period of time" must be more than two years.

By the way, invalid is not the same as inactive. I have an inactive Nordstrom card, and if I go into a store and try to use it, it will become active again (yes, I have done it). It was never invalid.
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Re: bad to cancel a retail credit card to get a different on

Postby tetractys » Sun Dec 09, 2012 3:44 pm

sscritic wrote:
tetractys wrote:Simply stop using it or destroy it. There's no need to make a formal cancelation in such case. In a short period of time it will become invalid and there will be no effect to your credit. I believe this is the best method of killing no fee cards. -- Tet

My oldest card is from 1982, my CPU/CITIBANKCBSDNA (yes I know what it really is). I use it about once every two years, so "a short period of time" must be more than two years.

By the way, invalid is not the same as inactive. I have an inactive Nordstrom card, and if I go into a store and try to use it, it will become active again (yes, I have done it). It was never invalid.

I was going to say "two or three" years," but with my lack of a definite number, and with the way time flies, "a short period of time" seemed appropriate. Good point about inactive vs. invalid. I had a Sears card which did become invalid, and was given a new one when I decided to shop there again after some time. -- Tet
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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Sun Dec 09, 2012 4:03 pm

tetractys wrote: I had a Sears card which did become invalid, and was given a new one when I decided to shop there again after some time. -- Tet

Me too. What's up with Sears? Did they change owners?
In 2003, Sears sold its retail credit card operation to Citibank.
...
Sears was bought out by Kmart in early 2005

My card that was invalidated was from the 80s. Not using it for 10 years or so might have had something to do with it. I was a cute little card, smaller than today's standard card size.
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Re: bad to cancel a retail credit card to get a different on

Postby Epsilon Delta » Sun Dec 09, 2012 7:23 pm

Archie Sinclair wrote:The scoring system is opaque (1) because FICO is a private company and needs to make money selling its formula and (2) very detailed information could help someone to game the system. FICO is trying to test whether you are a good credit risk, not whether you are good at jumping through hoops created by FICO.


It would not be surprising if somebody at FICO is researching if people who jump through hoops to try to improve their credit score are good or bad credit risks. Wouldn't it be ironic if they decide that trying to game the system lowered your score?
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Re: bad to cancel a retail credit card to get a different on

Postby umfundi » Mon Dec 10, 2012 1:14 am

Getting new credit lowers your score.

Cancelling old credit lowers your score.

The more you can prove you do not use or need credit, the higher your score. But, you must have available credit that you do not use.

The only benefit of a really high credit score that I have found is to get a really good deal on a new car lease. This is so they can advertise these incredibly good deals in the Sunday paper that almost no people qualify for. I am one of those few people that does qualify.

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Re: bad to cancel a retail credit card to get a different on

Postby icedtea » Mon Dec 10, 2012 10:55 pm

sscritic wrote:
icedtea wrote:I've read that if you cancel a credit card, you lose your history for that card, and that hurts your credit score. I have a Macy's credit card. I've had it for probably 4.5 years now. I've only used it three or four times total. I don't shop there much - I thought I would when I got the card - and they don't offer any discounts or special deals for cardholders.

Didn't you get your Friends and Family 25% discount card at the end of November? I used mine for the five days it was applicable. Although it said it was good for only a single purchase, every time I used it the clerk gave it back to me. One clerk just rang up the 25% discount without me showing the card. I bought outfits for my granddaughters: original price $59.50; sale price $29.75 (50% off); after 25% off the sale price $22.31 (as just one example).

I get either 15% or 20% off coupons and $10 off if you spend $25 or $30 coupons all the time in the mail. Have you moved?

P.S. I am speaking of the store card; if you have a branded credit card, that is something different.


I have the store card and I never hear about these discounts. Macy's has my current address. Strange.

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Re: bad to cancel a retail credit card to get a different on

Postby icedtea » Mon Dec 10, 2012 11:03 pm

sscritic wrote:
dailybagel wrote:I suggest you cancel. The credit history won't disappear. It will just stop growing. In seven years it will drop off your credit report, whereas if you keep it open indefinitely, it will stay on, of course.

And the difference is? If it makes no difference, why cancel? Actually, there is a difference. My credit limit on my Macy's card shows up on my credit reports. All my closed accounts show credit limits of $0. My debt to credit ratio is 1% (after rounding) so the reduction in credit limits doesn't mean much to me, but that may not be the case for the OP.


My credit limit on my Macys card is $2,000. This is the lowest limit of any of my cards. Sounds like it's to my benefit to keep the card to help my debt to credit ratio, and get a second retail card. But how many cards is too many cards?

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Re: bad to cancel a retail credit card to get a different on

Postby grabiner » Tue Dec 11, 2012 12:23 am

icedtea wrote:My credit limit on my Macys card is $2,000. This is the lowest limit of any of my cards. Sounds like it's to my benefit to keep the card to help my debt to credit ratio, and get a second retail card. But how many cards is too many cards?


Having a lot of cards is unlikely to hurt your credit score (as long as only a few have balances), but every open card is one more card that might have a fraudulent charge or a change in terms which you miss. For example, my Citibank Shell card discontinued automatic payment, and I only got one notice of this; it wasn't marked on my bill. If I had missed the notice, I wouldn't have paid the bill (expecting an automatic payment), and would have incurred a late charge and had a late payment on my report. (I then closed the card for an unrelated reason; the reward structure changed and was no longer worthwhile.)
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Re: bad to cancel a retail credit card to get a different on

Postby sscritic » Tue Dec 11, 2012 12:30 am

icedtea wrote:I have the store card and I never hear about these discounts. Macy's has my current address. Strange.

Iced Tea (OP)

Maybe you have to use the card once in a while for them to send you the promos, although my daughter gets the promos without even having a card. She must have given them her email address or even mailing address at some time. Macy's was formed out of many companies, so perhaps Macy's where I live is operated somewhat differently than the Macy's where you live.
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Re: bad to cancel a retail credit card to get a different on

Postby icedtea » Tue Dec 11, 2012 12:31 am

grabiner wrote:
icedtea wrote:My credit limit on my Macys card is $2,000. This is the lowest limit of any of my cards. Sounds like it's to my benefit to keep the card to help my debt to credit ratio, and get a second retail card. But how many cards is too many cards?


Having a lot of cards is unlikely to hurt your credit score (as long as only a few have balances), but every open card is one more card that might have a fraudulent charge or a change in terms which you miss. For example, my Citibank Shell card discontinued automatic payment, and I only got one notice of this; it wasn't marked on my bill. If I had missed the notice, I wouldn't have paid the bill (expecting an automatic payment), and would have incurred a late charge and had a late payment on my report. (I then closed the card for an unrelated reason; the reward structure changed and was no longer worthwhile.)


Good point. I missed a payment on my Macys card once because I was only getting the notifications by email and I never saw one. Tough when you get lots of emails every day. I paid the balance off a few days late and called them, and they said they wouldn't report it to the credit bureaus, as long as it was paid within a cycle after it was due. I think this is pretty common. They even agreed to credit me for the late charges.

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Re: bad to cancel a retail credit card to get a different on

Postby umfundi » Tue Dec 11, 2012 1:42 am

icedtea wrote:But how many cards is too many cards?

Iced Tea (OP)


When you start missing payments because you get too many emails? Really, put your payments on autopilot, schedule automatic withdrawals from your checking account on the due date.

And, by the way, you can call your card company and they will change the due date to any day you choose. Assuming you pay your entire balance each month, you can then play a game with billing and due dates that roughly gives you a continuous two-month interest free loan.

If your balance / available credit ratio is OK, and you are not opening and closing credit card accounts, your credit limit should stabilize, at least so far as those factors are concerned.

Personally, I have my payment dates all set at the 15th of the month. The only time my credit score personally matters is when I lease a car, and I do that (about once a year) the week after the 15th, when all the balances are low.

My number of cards is determined by my need for diversification, not by my need to pump my credit rating:
1. AMEX / Costco. Needed for membership, cheap gas and good cash back.
2. BofA debit card. Also my ATM card. Only place I use it is ALDI. They give ATM cash back, no fee.
3. BofA Mastercard. For places that don't take AMEX.
4. SDFCU Visa card. A recent addition, because it has a chip/PIN that works in Europe.
5. Wife has 1,2,3, but also a separate Visa card (Barclays) in her name only. Just in case.
6. Delta frequent flier AMEX. Used only for purchases re Delta air travel.

I don't have a wallet. I have a money clip with a small pocket and routinely carry only 1, 2, 3, my driver's license and my health insurance card.

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Re: bad to cancel a retail credit card to get a different on

Postby fareastwarriors » Tue Dec 11, 2012 12:48 pm

I have serval old Credit Cards that I don't use it anymore. When the expiration comes, new cards come but I don't activate them. Is that the same as cancelling by not activating my new cards?
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Re: bad to cancel a retail credit card to get a different on

Postby CABob » Tue Dec 11, 2012 12:54 pm

fareastwarriors wrote:I have serval old Credit Cards that I don't use it anymore. When the expiration comes, new cards come but I don't activate them. Is that the same as cancelling by not activating my new cards?

I don't think so. I believe that the card company still considers it to be an active account. At some point they may cancel the card because of non use, but, that may take a couple of years. I have more cards that I probably should for various reasons, but, I try to use all cards at least once a year.
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Re: bad to cancel a retail credit card to get a different on

Postby fareastwarriors » Tue Dec 11, 2012 1:07 pm

I'm too lazy to call. I guess I can just wait until they give up on me.
:D
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Re: bad to cancel a retail credit card to get a different on

Postby zvez » Tue Dec 11, 2012 4:44 pm

Dunno, keeping unused accounts open seems like bad advice to me. It leaves you open to identity theft, also the credit lines available (say I have $25k available on credit cards) that's got to have an adverse affect on applying for a loan, the company would theorize that $25k available credit is potentially $25k more debt of the person.

Requesting closure of the account, it'll still stay on your credit history and it will not adversely affect your credit because it's "closed by consumer"
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Re: bad to cancel a retail credit card to get a different on

Postby Default User BR » Wed Dec 12, 2012 3:04 am

fareastwarriors wrote:I have serval old Credit Cards that I don't use it anymore. When the expiration comes, new cards come but I don't activate them. Is that the same as cancelling by not activating my new cards?

Nope, those are still active accounts. They can even be used without activating, as I found out when a Discover card was used fraudulently.


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Re: bad to cancel a retail credit card to get a different on

Postby fareastwarriors » Wed Dec 12, 2012 12:55 pm

Default User BR wrote:
fareastwarriors wrote:I have serval old Credit Cards that I don't use it anymore. When the expiration comes, new cards come but I don't activate them. Is that the same as cancelling by not activating my new cards?

Nope, those are still active accounts. They can even be used without activating, as I found out when a Discover card was used fraudulently.


Brian



Thanks for the heads up.
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