Bad Idea to Close Oldest Credit Card?

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soup_can
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Bad Idea to Close Oldest Credit Card?

Post by soup_can » Tue Nov 19, 2019 1:16 pm

Hello Bogleheads,

I am interested in closing my oldest credit card account and I want to know how to estimate the impact on my credit score. For most of my life I had a single credit card and debit card at my bank. I valued being able to log into a single website and easily seeing credit card and bank account balances and making transfers.

In the past year I got fed up with my bank and switched everything over to another bank. I however left the credit card open and opened a new credit card with the new bank. I don't enjoy logging into multiple websites and I fear that there will be a month where I fail to pay off my old credit card (used only for Netflix). Overall I value keeping things simple.

Here are the particulars of my unique situation (via Credit Karma):
- 788 credit score
- payment history 100%
- Credit card use 3%
- Derogatory marks 0
- Credit age: 5 yrs 9 months
-- Credit Card #1 (which I want to close): 13 years
-- Credit Card #2: 9 months
-- Mortgage: 3 years, 7 months
- Total account 3
- Hard inquiries 0

Closing my credit card will further ding me in areas that I'm already losing points in (credit age, total accounts). How can I estimate the impact on my credit score? As I currently already have a mortgage I don't really see myself purchasing a new house anytime soon. How would your analysis change if the original bank started charging me money to keep the credit card open?

Thanks in advance.

HomeStretch
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Re: Bad Idea to Close Oldest Credit Card?

Post by HomeStretch » Tue Nov 19, 2019 1:23 pm

Closing your oldest account will likely have an impact on your credit score. But I’m not sure how that can be estimated as the actual FICO scoring methodology is not public information. If you are concerned about the impact on your credit score/history, another option is to move your recurring Netflix charge to your new credit card and put the old card in your sock drawer.

Silk McCue
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Re: Bad Idea to Close Oldest Credit Card?

Post by Silk McCue » Tue Nov 19, 2019 1:29 pm

I can't tell you by how much but yes cancelling that oldest card is going to hurt your score. If you are concerned about forgetting to pay the bill on the old card which only has Netflix charged to it set it for auto pay from your checking account. You never know when you might decide to buy a car, find a reason to want or need to purchase a new home etc.

Setting up auto pay and logging in once a month mid cycle to check on the account is not too much effort to ensure a better credit score should you need it. If you are able to set the credit card to notify you when charges or payments are made you won't even need to login.

Cheers

anon_investor
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Re: Bad Idea to Close Oldest Credit Card?

Post by anon_investor » Tue Nov 19, 2019 1:43 pm

Why not do this (I personally do this with my oldest credit card, which I got in college, which I barely use anymore):

1. I have no reoccurring payments on it.
2. I usually do not carry it, it stays locked away in a drawer.
3. I do not use it for online purchases.
4. At least once a year I will take it out to buy a coffee or something small to make sure the account stays active.
5. (If your account has this option) I activate the "freeze" option which means the card cannot be used.
6. I have email reminders when the CC statement closes (the emails tell me if I have a balance).

No sense of hurting your credit score simply to avoid 1 extra login.

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bertilak
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Re: Bad Idea to Close Oldest Credit Card?

Post by bertilak » Tue Nov 19, 2019 1:49 pm

Above advice is all good.

II have no idea if this is any good or not but perhaps you want to play with it ... Credit Karma's credit score simulator

It has a specific selection for "What might happen if I close my oldest card?" Note the "might!" That is perhaps the key word. I have seen similar things elsewhere but that is the one I just found via Google for "credit score simulator".
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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LilyFleur
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Re: Bad Idea to Close Oldest Credit Card?

Post by LilyFleur » Tue Nov 19, 2019 2:18 pm

I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.

I really don't want the complexity of charging something on that card and then having to pay it every month.

But I am thinking since I've had the card probably more than 20 years, that it will ding my credit score if I cancel it.

MichCPA
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Re: Bad Idea to Close Oldest Credit Card?

Post by MichCPA » Tue Nov 19, 2019 2:21 pm

Cards stay on your record for 10 years after you close them. The only immediate hit is utilization. As long as the remaining limit is high, impact of closure is minimal.

MichCPA
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Re: Bad Idea to Close Oldest Credit Card?

Post by MichCPA » Tue Nov 19, 2019 2:22 pm

LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.

I really don't want the complexity of charging something on that card and then having to pay it every month.

But I am thinking since I've had the card probably more than 20 years, that it will ding my credit score if I cancel it.
It won't. The card will stay on your record for 10 years. The only immediate hit will be your utilization.

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djpeteski
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Re: Bad Idea to Close Oldest Credit Card?

Post by djpeteski » Tue Nov 19, 2019 2:30 pm

- 788 credit score
This will have no meaningful impact on your credit score. Unless, of course, your ego will be damaged. At that level 725 == 788 == 825.

MotoTrojan
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Re: Bad Idea to Close Oldest Credit Card?

Post by MotoTrojan » Tue Nov 19, 2019 2:41 pm

My oldest card is with Wells Fargo and hasn't been used in ~3 years. No cancellation yet, but perhaps they are giving me some leniency since the limit is small on it ($1000, was a college/student card) and I spend quite a bit on my other Wells Fargo card every month.

khangaroo
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Re: Bad Idea to Close Oldest Credit Card?

Post by khangaroo » Tue Nov 19, 2019 2:57 pm

FWIW I just closed my credit card that was 3 years old and it dropped my credit score by 18 points. I was at 802. My credit age is similar to yours.

I would say don't fret about it unless you plan on buying a home in the next few years.

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CABob
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Re: Bad Idea to Close Oldest Credit Card?

Post by CABob » Tue Nov 19, 2019 3:51 pm

LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.
Anyone else having this experience with Chase? I have had a Chase card for some time but only use it upon occasion with sometimes several months in a row without any charges. Am I in danger of having a fee imposed?
Bob

Jags4186
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Re: Bad Idea to Close Oldest Credit Card?

Post by Jags4186 » Tue Nov 19, 2019 3:57 pm

CABob wrote:
Tue Nov 19, 2019 3:51 pm
LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.
Anyone else having this experience with Chase? I have had a Chase card for some time but only use it upon occasion with sometimes several months in a row without any charges. Am I in danger of having a fee imposed?
Sorry but I don't believe the poster. Chase has sent me many letters saying they are going to close accounts for 1+ year inactivity, but I just send a secure message to request the card be kept open (no fee United Awards Card). I've never been charged $0.01 in "inactivity fees" even on cards that haven't been used in 3, 4, 5 years. There also is no "inactivity fee" in their disclosure.

Edit: I should say I believe they may be getting charged $10 for something (maybe a subscription they forgot about?) but not $10/mo for not using the card.

mptfan
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Re: Bad Idea to Close Oldest Credit Card?

Post by mptfan » Tue Nov 19, 2019 3:59 pm

anon_investor wrote:
Tue Nov 19, 2019 1:43 pm
No sense of hurting your credit score simply to avoid 1 extra login.
I don't agree with this. I am happy to hurt my credit score to avoid an extra login, I like simplicity and I like to avoid the risk of keeping open unused lines of credit.

Hockey10
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Re: Bad Idea to Close Oldest Credit Card?

Post by Hockey10 » Tue Nov 19, 2019 4:30 pm

LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.

I really don't want the complexity of charging something on that card and then having to pay it every month.

But I am thinking since I've had the card probably more than 20 years, that it will ding my credit score if I cancel it.
:confused
I have never heard of this and I have been a Chase customer for 20+ years with multiple Chase cards, some of which were dormant for awhile.

fatcharlie
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Re: Bad Idea to Close Oldest Credit Card?

Post by fatcharlie » Tue Nov 19, 2019 4:43 pm

bertilak wrote:
Tue Nov 19, 2019 1:49 pm
Above advice is all good.

II have no idea if this is any good or not but perhaps you want to play with it ... Credit Karma's credit score simulator

It has a specific selection for "What might happen if I close my oldest card?" Note the "might!" That is perhaps the key word. I have seen similar things elsewhere but that is the one I just found via Google for "credit score simulator".
I tried this and it always bugs out, saying it doesn't affect my score, this isn't a result they expect and something may have gone wrong.

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LilyFleur
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Re: Bad Idea to Close Oldest Credit Card?

Post by LilyFleur » Tue Nov 19, 2019 6:22 pm

Jags4186 wrote:
Tue Nov 19, 2019 3:57 pm
CABob wrote:
Tue Nov 19, 2019 3:51 pm
LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.
Anyone else having this experience with Chase? I have had a Chase card for some time but only use it upon occasion with sometimes several months in a row without any charges. Am I in danger of having a fee imposed?
Sorry but I don't believe the poster. Chase has sent me many letters saying they are going to close accounts for 1+ year inactivity, but I just send a secure message to request the card be kept open (no fee United Awards Card). I've never been charged $0.01 in "inactivity fees" even on cards that haven't been used in 3, 4, 5 years. There also is no "inactivity fee" in their disclosure.

Edit: I should say I believe they may be getting charged $10 for something (maybe a subscription they forgot about?) but not $10/mo for not using the card.
So, I called Chase this morning, asked why they were charging me for non-use, and they said they weren't. I could swear I saw something from them that said non-use on it. So I said I wanted to close the card, and they offered me six months of 1.99% cash back rewards, and I realized I don't do well if I have too many credit cards (example: my error on the non-use thing) (too much for me to keep track of), so I cancelled anyway.

Now I think I need to consolidate all of my bill payments on the same day each month to further simplify my life.

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bertilak
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Re: Bad Idea to Close Oldest Credit Card?

Post by bertilak » Tue Nov 19, 2019 6:33 pm

fatcharlie wrote:
Tue Nov 19, 2019 4:43 pm
bertilak wrote:
Tue Nov 19, 2019 1:49 pm
Above advice is all good.

II have no idea if this is any good or not but perhaps you want to play with it ... Credit Karma's credit score simulator

It has a specific selection for "What might happen if I close my oldest card?" Note the "might!" That is perhaps the key word. I have seen similar things elsewhere but that is the one I just found via Google for "credit score simulator".
I tried this and it always bugs out, saying it doesn't affect my score, this isn't a result they expect and something may have gone wrong.
Perhaps this post above explains it.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

michaeljc70
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Re: Bad Idea to Close Oldest Credit Card?

Post by michaeljc70 » Tue Nov 19, 2019 6:43 pm

I am in a similar situation of keeping open a couple cards I really don't use/want due to potential impact on my credit score. The thing I never understood is, the credit score category is called "length of credit history". Closing an account doesn't really change the length of your credit history. It changes the history of one card....which if you have others with plenty of history shouldn't be much of a factor.

Put another way, take two people:

Person A:
20 years credit history
1 MC, 20 years history
1 Visa 10 years, then closed
1 Visa 10 years, opened after the one above was closed


Person B:
20 years credit history
1 MC, 20 years history
1 Visa 20 years

Should person B really have a better credit score? Obviously the credit bureaus have teams of actuaries and they must have seen something....but maybe their algorithm is too generic.

My score is in the 820 range and since I don't plan on applying for credit other than maybe a credit card here and there for bonuses maybe it is moot.

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CABob
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Re: Bad Idea to Close Oldest Credit Card?

Post by CABob » Tue Nov 19, 2019 7:18 pm

The thing I never understood is, the credit score category is called "length of credit history". Closing an account doesn't really change the length of your credit history. It changes the history of one card....which if you have others with plenty of history shouldn't be much of a factor.
But the OP said this was his oldest card and only card for many years.
However, this card is part of his credit history and will remain a part of his history for another 10 years as I understand it.
Bob

iamblessed
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Re: Bad Idea to Close Oldest Credit Card?

Post by iamblessed » Tue Nov 19, 2019 7:44 pm

I closed my oldest card and opened a new one. My score went down 25 points. I knew it would go down but since I was around 800 I did not care. Within about 6 to a year it was back up. I am very much like you. I value keeping things simple as number one. Looking back I was glad I did it.

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grabiner
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Re: Bad Idea to Close Oldest Credit Card?

Post by grabiner » Sun Nov 24, 2019 7:03 pm

I would not recommend closing the oldest card unless you open a new card. If you have only one credit card and it gets blocked because of fraudulent use, you don't have a credit card at all for several days.

In addition, having only two open accounts will significantly reduce your credit score with many models. (I got caught by this when I applied for insurance in NJ; I paid significantly more for auto insurance because I had only two credit cards and no other open accounts. Two years later, with three credit cards, even though one was newer, I asked for a re-score and got a lower rate.)

Opening a new card will reduce your credit score, whether you close the oldest card or not. But the reduction from the new card is temporary; if you don't apply for new credit within the next year, then by the time you do apply, the new card will no longer be new, and the inquiry will not be relevant. But if you want to refinance your mortgage, you should probably do that before either closing the old card or opening the new card.
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Blue456
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Re: Bad Idea to Close Oldest Credit Card?

Post by Blue456 » Sun Nov 24, 2019 7:31 pm

I closed my oldest card. My score didn't drop. The card stays on file for 10 years. By that time I'm gonna have another card. Keep it simple.

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JoMoney
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Re: Bad Idea to Close Oldest Credit Card?

Post by JoMoney » Sun Nov 24, 2019 7:48 pm

Your credit score will drop from reducing your available credit, the age of your oldest credit line, and potentially from using a higher % of your now lower available credit... but how important is a few points in the score to you?
I've closed cards and moved to new ones periodically and as far as I can tell my credit continued to be "Excellent".
If I was considering refinancing a house sometime in the near future I might be a bit cautious about it, maybe if I only had "good" or average credit rating and wanted to improve it... but otherwise trying to game the points for the sake of the points themselves seems silly to me.
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Bama12
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Re: Bad Idea to Close Oldest Credit Card?

Post by Bama12 » Sun Nov 24, 2019 7:52 pm

I do not have a Credit Card and never will. Either pay cash or don't buy.

Katietsu
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Re: Bad Idea to Close Oldest Credit Card?

Post by Katietsu » Sun Nov 24, 2019 7:54 pm

LilyFleur wrote:
Tue Nov 19, 2019 2:18 pm
I quit using my chase freedom card after I got my Citibank 2% cash back card.

Now Chase is charging me $10 a month for not using the card.

I really don't want the complexity of charging something on that card and then having to pay it every month.

But I am thinking since I've had the card probably more than 20 years, that it will ding my credit score if I cancel it.
I have never heard of something like a dormant fee for a credit card. I did have Chase just close a credit card that I was not using. Interesting.

Trader Joe
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Re: Bad Idea to Close Oldest Credit Card?

Post by Trader Joe » Sun Nov 24, 2019 7:55 pm

soup_can wrote:
Tue Nov 19, 2019 1:16 pm
Hello Bogleheads,

I am interested in closing my oldest credit card account and I want to know how to estimate the impact on my credit score. For most of my life I had a single credit card and debit card at my bank. I valued being able to log into a single website and easily seeing credit card and bank account balances and making transfers.

In the past year I got fed up with my bank and switched everything over to another bank. I however left the credit card open and opened a new credit card with the new bank. I don't enjoy logging into multiple websites and I fear that there will be a month where I fail to pay off my old credit card (used only for Netflix). Overall I value keeping things simple.

Here are the particulars of my unique situation (via Credit Karma):
- 788 credit score
- payment history 100%
- Credit card use 3%
- Derogatory marks 0
- Credit age: 5 yrs 9 months
-- Credit Card #1 (which I want to close): 13 years
-- Credit Card #2: 9 months
-- Mortgage: 3 years, 7 months
- Total account 3
- Hard inquiries 0

Closing my credit card will further ding me in areas that I'm already losing points in (credit age, total accounts). How can I estimate the impact on my credit score? As I currently already have a mortgage I don't really see myself purchasing a new house anytime soon. How would your analysis change if the original bank started charging me money to keep the credit card open?

Thanks in advance.
Why do you need credit? Do your expenses exceed your income?

Katietsu
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Re: Bad Idea to Close Oldest Credit Card?

Post by Katietsu » Sun Nov 24, 2019 8:02 pm

I would keep it open partially because it is your oldest card but more so because I would want two cards. For instance, I was out of town when I received an email that my primary card had been blocked. The credit card company deducted one of those small under $10 charges for some online company in China that was meant as a test to see if the card number was valid. It would have been a huge problem if I did not have a second card with me.

Some people use their birthdays as a reminder to take out and use their back up card.

aristotelian
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Re: Bad Idea to Close Oldest Credit Card?

Post by aristotelian » Sun Nov 24, 2019 9:28 pm

iamblessed wrote:
Tue Nov 19, 2019 7:44 pm
I closed my oldest card and opened a new one. My score went down 25 points. I knew it would go down but since I was around 800 I did not care. Within about 6 to a year it was back up. I am very much like you. I value keeping things simple as number one. Looking back I was glad I did it.
+1, unless you plan to take out a mortgage sometime soon, I doubt canceling the card or any minor change to your credit score will affect your life in any meaningful way.

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soup_can
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Re: Bad Idea to Close Oldest Credit Card?

Post by soup_can » Mon Nov 25, 2019 1:39 am

bertilak wrote:
Tue Nov 19, 2019 1:49 pm
Above advice is all good.

II have no idea if this is any good or not but perhaps you want to play with it ... Credit Karma's credit score simulator

It has a specific selection for "What might happen if I close my oldest card?" Note the "might!" That is perhaps the key word. I have seen similar things elsewhere but that is the one I just found via Google for "credit score simulator".
Credit Karma's simluator says I will drop from 788 to 784. Seems like a no brainer to get rid of this card. Thanks for your advice.

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bertilak
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Re: Bad Idea to Close Oldest Credit Card?

Post by bertilak » Mon Nov 25, 2019 9:15 am

soup_can wrote:
Mon Nov 25, 2019 1:39 am
bertilak wrote:
Tue Nov 19, 2019 1:49 pm
Above advice is all good.

II have no idea if this is any good or not but perhaps you want to play with it ... Credit Karma's credit score simulator

It has a specific selection for "What might happen if I close my oldest card?" Note the "might!" That is perhaps the key word. I have seen similar things elsewhere but that is the one I just found via Google for "credit score simulator".
Credit Karma's simluator says I will drop from 788 to 784. Seems like a no brainer to get rid of this card. Thanks for your advice.
Perhaps the comment above that they track even closed accounts for some time means it will take time for this to "age out."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

PeterParker
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Re: Bad Idea to Close Oldest Credit Card?

Post by PeterParker » Mon Nov 25, 2019 12:05 pm

1. Card will remain on for 10 years anyway like others have said.

2. Chase isn't charging $10 a month for not using credit cards. Period. Maybe they are for their checking accounts. If you don't use the credit card at all, the bank will close it themselves after a year or two of no charges.

3. It's probably prudent to just leave Netflix on it, and leave it on auto-pay. Because credit card age helps your credit score. But moreover, if you get into the Churning points game where you will be opening 6+ cards, it's good to have that old card there balancing out the age in the future, but again, 10 years.

But yeah it's mostly a meaningless wash. If you prefer to login to one bank rather than Mint or Personal Capital to look at all your credit cards, fair enough. Cancel the card. It will remain for 10 years, where your other cards would have +10 years on them.

rivercrosser
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Re: Bad Idea to Close Oldest Credit Card?

Post by rivercrosser » Mon Nov 25, 2019 6:41 pm

Couple years back I wanted to change my US Bank Visa card to the Cash+ to get better rewards. Same bank, both Visa but they wouldn't let me just upgrade existing card. I ended up closing the old one out later on just to simplify things and I knew it would never get used again. Kinda pissed me off cause it did drop my score some. I'm back up close to 800 now so its no big deal.

tesuzuki2002
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Re: Bad Idea to Close Oldest Credit Card?

Post by tesuzuki2002 » Mon Nov 25, 2019 6:48 pm

become a millionaire.... your credit score will become irrelevant...

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