Closing unused credit cards

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new2bogle
Posts: 853
Joined: Fri Sep 11, 2009 2:05 pm

Closing unused credit cards

Postby new2bogle » Fri Apr 21, 2017 9:06 am

I was looking at my credit report today (through credit karma) and noticed that I have several credit cards open that I haven't used in almost a decade. Should I close these? I know things like length of credit open help your credit score and having open but not used credit reduces my overall utilization, also helping credit score.

On the other hand, doesn't having cards that I don't use and rarely check increase odds of it being used fraudulently (by means of "hackers" somehow getting the number)? I have definitely had my cards "hacked" even though they were always in my possession, either through guessing or data leaks from where ever I used them. I suppose if I never use them, then the numbers can't be leaked.

Thoughts?

Da5id
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Re: Closing unused credit cards

Postby Da5id » Fri Apr 21, 2017 9:10 am

new2bogle wrote:I was looking at my credit report today (through credit karma) and noticed that I have several credit cards open that I haven't used in almost a decade. Should I close these? I know things like length of credit open help your credit score and having open but not used credit reduces my overall utilization, also helping credit score.

On the other hand, doesn't having cards that I don't use and rarely check increase odds of it being used fraudulently (by means of "hackers" somehow getting the number)? I have definitely had my cards "hacked" even though they were always in my possession, either through guessing or data leaks from where ever I used them. I suppose if I never use them, then the numbers can't be leaked.


Do you care about your credit rating in the short term (as in are you applying for credit soon)? If not, you could cancel the cards. You can request an increase to your limits on other cards to deal with utilization issue, CC companies seem usually happy to increase limits when requested.

That said, I have old cards I leave in the drawer and don't cancel myself. Given the limits to liability for fraud, they don't seem to hurt much.

rec7
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Re: Closing unused credit cards

Postby rec7 » Fri Apr 21, 2017 9:13 am

I cancel my unused cards all the time. My credit score is over 800 so I can stand the drop in score. If you have no debt and your score is higher than 780 I would guess you would be alright. You could start by closing one or two then see what you score does.
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new2bogle
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Joined: Fri Sep 11, 2009 2:05 pm

Re: Closing unused credit cards

Postby new2bogle » Fri Apr 21, 2017 9:19 am

I'm not getting new credit soon that I can think of (refinanced mortgage last summer, no car purchases, no new CC that I can think of unless a stellar Airline miles deal comes along).

Score right now is 792/798 in Credit karma.

I think to me the fraud dollar amount isn't the issue as much as missing the fraudulent event and then having that reported as late or to collections. I say this because it looks like that is happening to my wife right now (card closed with $0 balance, but some debt on it being sold to a collection agency). I'll probably be posting another thread about that soon once I have more info.

takeshi
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Joined: Thu Oct 03, 2013 10:02 pm

Re: Closing unused credit cards

Postby takeshi » Fri Apr 21, 2017 11:04 am

It's really up to you to weigh the considerations and do what works for you. You should be regularly monitoring all of your open accounts and if you can/will not do that then you probably should consider closing the accounts you don't use often and don't regularly monitor to avoid missing potential fraudulent activity.

Closing a credit card does not immediately impact your Average Age of Accounts. Closed accounts typically continue to show up on reports for up to 10 years and factor into AAoA as long as they are on a report.

Immediate impact from closing a credit card would be due to the change in revolving utilization since your closed card no longer has available credit. You can do the math (it's just balance[s]/limit[s]) to see if you'd see a drastic increase and if that's a concern then you might want to see if you can consolidate limits -- that is, if you have multiple cards with a given creditor and you're closing one card with the creditor and not the other and the creditor allows you to reallocate credit between the cards.

new2bogle wrote:Score right now is 792/798 in Credit karma.

I'm not aware of any credit card companies that use VantageScore 3.0 for decisions, There are some but most use one of the FICO models. That said, those scores do indicate very "excellent" range so you probably don't have much to worry about impact from closing cards.

new2bogle wrote:I think to me the fraud dollar amount isn't the issue as much as missing the fraudulent event and then having that reported as late or to collections.

That may depend on what the criminal does with your account. For example, someone just stole my wife's wallet and made a $2,600 purchase at Apple with one of her cards. Since her wallet was stolen, we noticed pretty quickly. However, it that was unnoticed fraud I would certainly be concerned if I was stuck with the amount because I missed the window to deal with the fraudulent transaction.

That said, you definitely don't want even a $1 fraudulent transaction to go missed and report as late and/or go to collection. Payment History is the biggest factor and you want to keep your Payment History spotless.
http://www.myfico.com/credit-education/ ... dit-score/

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flamesabers
Posts: 353
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Closing unused credit cards

Postby flamesabers » Fri Apr 21, 2017 11:19 am

If it gives you peace of mind, I would agree with closing unused credit cards.

Otherwise you could try steps like reducing the credit limits on these cards to a bare minimum and asking your issuer about the possibility of freezing the card(s) in question.

Alexa9
Posts: 128
Joined: Tue Aug 30, 2016 9:41 am

Re: Closing unused credit cards

Postby Alexa9 » Fri Apr 21, 2017 11:32 am

I think more than around four main cards is overkill and not worth monitoring. If you're churning for free flights as a hobby that's different. Closing old accounts doesn't affect your account much. They stay on your report for 10? years I believe and your current cards will be 10 years older by the time they are removed. See if you can change the old cards to a better rewards card with the same bank. If not, I'd just close them. I wouldn't worry about being liable for fraud but it is a pain to deal with. I would recommend changing your card number every 5 years or so on old cards.

I have an AMEX right now that isn't that great but I'm holding on to it to age my accounts and maybe switch it to something better if they come out with a new card. It's also nice to use one card just for online purchases that you keep at home because that's where a lot of fraud happens. Also a different one for shopping and going out to eat/drink because that is also commonly stolen.

Usually they will close your account now if you don't use a card every 6 months or so.


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