Credit card advice

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BostonButterfly
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Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 6:20 am

In my quest to simplify, I'd like to close a credit card that I never use. It does have an annual fee, so if it weren't for that, I'd just let it ride.

My first thought was that closing the card will hit my credit score, which I guess is fine, as I have excellent credit. I'd like to think it will be a temporary hit to the score. My second thought was that I should request an increase in credit limit on my other credit card that I do use all the time. (I use this card for travel points). The card that I'd like to close has a high credit limit, while the card I'm keeping has a fairly low limit. It seems like I should increase the limit on the card I'd like to keep, THEN close the other card. When I go online to request an increase in credit limit, it clearly states that this will result in an inquiry on my credit. Should I care?

(FWIW, we pay credit cards in full every month. I use one, wife uses two. Honestly, the credit limit seems like a security blanket to me. Although I likely won't NEED the higher limit, its the what ifs that always rumble around in the back of my head.)

Thoughts/advice?

MikeG62
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Re: Credit card advice

Post by MikeG62 » Thu Sep 13, 2018 6:41 am

BostonButterfly wrote:
Thu Sep 13, 2018 6:20 am
In my quest to simplify, I'd like to close a credit card that I never use. It does have an annual fee, so if it weren't for that, I'd just let it ride.

My first thought was that closing the card will hit my credit score, which I guess is fine, as I have excellent credit. I'd like to think it will be a temporary hit to the score. My second thought was that I should request an increase in credit limit on my other credit card that I do use all the time. (I use this card for travel points). The card that I'd like to close has a high credit limit, while the card I'm keeping has a fairly low limit. It seems like I should increase the limit on the card I'd like to keep, THEN close the other card. When I go online to request an increase in credit limit, it clearly states that this will result in an inquiry on my credit. Should I care?

(FWIW, we pay credit cards in full every month. I use one, wife uses two. Honestly, the credit limit seems like a security blanket to me. Although I likely won't NEED the higher limit, its the what ifs that always rumble around in the back of my head.)

Thoughts/advice?
I agree with this approach. If the increase is not fully to the level you want, you can always follow up with a call (or do it a few months later, once you have closed the other card).

The hit to your credit score should be temporary.
Real Knowledge Comes Only From Experience

snailderby
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Re: Credit card advice

Post by snailderby » Thu Sep 13, 2018 6:44 am

Instead of cancelling the card, can you downgrade it to another card from the same company with no annual fee? If that's possible, you may be able to retain its credit limit and account history.

student
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Re: Credit card advice

Post by student » Thu Sep 13, 2018 6:46 am

snailderby wrote:
Thu Sep 13, 2018 6:44 am
Instead of cancelling the card, can you downgrade it to another card from the same company with no annual fee? If that's possible, you may be able to keep the old card's credit limit and account history.
+1. This is a standard strategy.

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whodidntante
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Re: Credit card advice

Post by whodidntante » Thu Sep 13, 2018 7:01 am

The most rewarding outcome is usually to open a new credit card that includes a nice bonus and sometimes a 0% purchase APR period, rather than to ask for a credit limit increase. One exception is AmEx, who is known to give large increases without a hard pull.

Regarding the annual fee, I've found that some issuers are willing to waive the fee if you ask, or to give you a bonus of similar value. You can also potentially downgrade to a no annual fee card of lower value.

kaudrey
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Re: Credit card advice

Post by kaudrey » Thu Sep 13, 2018 7:20 am

If you have excellent credit, just close it. I did it a few months ago with a card I had had since 1989, and my score barely moved. Unless you need a loan in the next few months, who cares?

bob60014
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Re: Credit card advice

Post by bob60014 » Thu Sep 13, 2018 7:29 am

kaudrey wrote:
Thu Sep 13, 2018 7:20 am
If you have excellent credit, just close it. I did it a few months ago with a card I had had since 1989, and my score barely moved. Unless you need a loan in the next few months, who cares?
+1 This! I recently did also, score of 815 and it dropped 3 pts. Not a big deal under any circumstances. If it makes you feel better up the limits on the other cards but it may not be necessary.

BostonButterfly
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Re: Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 7:42 am

I guess I'm less concerned with closing the account than the hard pull to increase the limit on the other card. I suppose if I open a new card, there will be a hard pull on that too.

I have not asked the existing issuer to waive the fee. I guess I could try that. Although, the card is through a very large bank who I'm not happy with. I actually just closed my checking account with them because of my displeasure. I now want to close their credit card just so I can be done with them! I don't know if forum rules prevent me from saying which bank, but its the bank of the country I live in.

Am I making a mountain out of a mole hill?

Horsefly
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Re: Credit card advice

Post by Horsefly » Thu Sep 13, 2018 8:07 am

Having just cleansed myself of Wells Fargo (where I had banked for over 10 years), I hear you. I think you will be just fine closing the account, and it sounds like it will make you feel better.

Opening a new card or increasing the limit on another will require a hard inquiry, but one inquiry won't be a big deal to your credit either.

Unless you are going to buy a new house soon, just close the old card and celebrate. Then you can go get more credit when you feel like it.

BostonButterfly
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Re: Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 8:16 am

Its true. I just want to be done with this bank. I guess I'll just close it, accept the hard pull to increase the limit on my other card, and whatever happens to my credit happens. It will be temporary. Will probably never apply for another mortgage (aggressively paying mine down). Only thing in the back of my mind is opening a HELOC at some point as a safety net only.

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Watty
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Re: Credit card advice

Post by Watty » Thu Sep 13, 2018 8:37 am

student wrote:
Thu Sep 13, 2018 6:46 am
snailderby wrote:
Thu Sep 13, 2018 6:44 am
Instead of cancelling the card, can you downgrade it to another card from the same company with no annual fee? If that's possible, you may be able to keep the old card's credit limit and account history.
+1. This is a standard strategy.
Another +1

You should really have more than one credit card for backup too especially when you are traveling since there can be a snafu where your card is declined or compromised and needs to be cancelled.

I have had credit cards unexpectedly declined just because some computer thought that my spending pattern was unusual and they put a fraud alert freeze on it. You may be able to get it unfrozen by calling to confirm that you are using it but that would be pretty awkward when you are at a restaurant or checkout line.

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jabberwockOG
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Re: Credit card advice

Post by jabberwockOG » Thu Sep 13, 2018 9:09 am

BostonButterfly wrote:
Thu Sep 13, 2018 7:42 am
I guess I'm less concerned with closing the account than the hard pull to increase the limit on the other card. I suppose if I open a new card, there will be a hard pull on that too.

I have not asked the existing issuer to waive the fee. I guess I could try that. Although, the card is through a very large bank who I'm not happy with. I actually just closed my checking account with them because of my displeasure. I now want to close their credit card just so I can be done with them! I don't know if forum rules prevent me from saying which bank, but its the bank of the country I live in.

Am I making a mountain out of a mole hill?
Unless you are in serious consumer debt and need to get even more loans or you are days or weeks away from applying for a home loan I don't understand the obsession with credit score and hard pull versus soft pull. Eliminate a much debt as possible. Credit cards are extremely foolish tools to use to finance a lifestyle that a person cannot afford. Instead use credit cards for every purchase to generate points and rebates but pay them off to the penny each and every month.

TravelGeek
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Re: Credit card advice

Post by TravelGeek » Thu Sep 13, 2018 9:39 am

Watty wrote:
Thu Sep 13, 2018 8:37 am
You should really have more than one credit card for backup too especially when you are traveling since there can be a snafu where your card is declined or compromised and needs to be cancelled.

I have had credit cards unexpectedly declined just because some computer thought that my spending pattern was unusual and they put a fraud alert freeze on it. You may be able to get it unfrozen by calling to confirm that you are using it but that would be pretty awkward when you are at a restaurant or checkout line.
Agreed. And I would diversify by having cards with multiple banks. There are plenty to choose from.

BostonButterfly
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Re: Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 9:40 am

jabberwockOG wrote:
Thu Sep 13, 2018 9:09 am
Unless you are in serious consumer debt and need to get even more loans or you are days or weeks away from applying for a home loan I don't understand the obsession with credit score and hard pull versus soft pull. Eliminate a much debt as possible. Credit cards are extremely foolish tools to use to finance a lifestyle that a person cannot afford. Instead use credit cards for every purchase to generate points and rebates but pay them off to the penny each and every month.
I use credit cards wisely. They are paid off every month, and I use them as a tool to accumulate travel points. The only debt I have is a 2.625% mortgage and a 0.00% auto loan. Those rates are hard to come by without excellent credit. My "obsession" with credit score is that I have worked very hard to achieve excellent credit and would like to keep it that way. (My first marriage was a lovely experience that included hidden debt, which I worked my tail off and sacrificed much to pay off. Eventual divorce left me financially far behind where I should have been. But I digress.)

I don't want to make a stupid quick decision, only to find out later that maybe I shouldn't have closed the account. That's way I'm here......to make educated decisions.

BostonButterfly
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Re: Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 9:45 am

Watty wrote:
Thu Sep 13, 2018 8:37 am
You should really have more than one credit card for backup too especially when you are traveling since there can be a snafu where your card is declined or compromised and needs to be cancelled.

I have two, and wife has two. If I close this one, we will have three between us. One has travel points, one has airline miles and the other is run of the mill Amex card.

inbox788
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Re: Credit card advice

Post by inbox788 » Thu Sep 13, 2018 10:30 am

Yes, simplify.

There is such a thing as too much credit. There was one thread where someone had 5 cards totaling over $100k in credit limit that I think is too much for me. One person reported they had to reduce their total credit to below their annual salary to qualify for mortgage. So, is there an ideal level of credit if it was self-determined? If a company offered you a $100k credit line or a $50k credit line, would you accept it, or ask for a lower one? And how many cards or accounts would be the right number? Is it a hard number (i.e. a plane ticket out of town in an emergency) or a function of ones annual budget or salary? If latter, how many times? Alternatively, average or peak spending might be used, maybe say 3 or 5x average or 2x peak?

My main concern would be risk/liability like how the company would deal with 4 first class ticket suddenly bought on the card, either by me in an emergency vs. stopping a fraudster. With my luck, the fraudster would succeed, and I would be stopped.

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jabberwockOG
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Re: Credit card advice

Post by jabberwockOG » Thu Sep 13, 2018 10:34 am

BostonButterfly wrote:
Thu Sep 13, 2018 9:40 am
jabberwockOG wrote:
Thu Sep 13, 2018 9:09 am
Unless you are in serious consumer debt and need to get even more loans or you are days or weeks away from applying for a home loan I don't understand the obsession with credit score and hard pull versus soft pull. Eliminate a much debt as possible. Credit cards are extremely foolish tools to use to finance a lifestyle that a person cannot afford. Instead use credit cards for every purchase to generate points and rebates but pay them off to the penny each and every month.
I use credit cards wisely. They are paid off every month, and I use them as a tool to accumulate travel points. The only debt I have is a 2.625% mortgage and a 0.00% auto loan. Those rates are hard to come by without excellent credit. My "obsession" with credit score is that I have worked very hard to achieve excellent credit and would like to keep it that way. (My first marriage was a lovely experience that included hidden debt, which I worked my tail off and sacrificed much to pay off. Eventual divorce left me financially far behind where I should have been. But I digress.)

I don't want to make a stupid quick decision, only to find out later that maybe I shouldn't have closed the account. That's way I'm here......to make educated decisions.
If you are actually doing what you state above, you have zero need to worry about notions like "hard pulls". We have aggressively churned cards for years opening and closing uncountable numbers of cards. Credit score has always been slightly above 800 and have never been denied any card for credit reasons.

essbeer
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Re: Credit card advice

Post by essbeer » Thu Sep 13, 2018 11:12 am

I think generally, if the age of this account is younger than your average age of accounts it will be a drag on your score until it falls off your credit report. If it's not it won't. If closing this account substantially increases your credit utilization you will get dinged for sure. But closing the account might change your credit profile grouping which has a somewhat unpredictable effect since profile groups are industry secrets.

BostonButterfly
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Re: Credit card advice

Post by BostonButterfly » Thu Sep 13, 2018 12:38 pm

Thank you all for your input. Much appreciated.
I will close the account, and will leave my remaining card credit limit as is. I'll report back how much it impacts my credit score.....for future reference if anyone has any interest.

Kevin8696
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Re: Credit card advice

Post by Kevin8696 » Thu Sep 13, 2018 2:17 pm

Can you convert your annual fee card to a no annual fee card at your current credit card company ?

That might avoid the hit of closing an account...

TropikThunder
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Re: Credit card advice

Post by TropikThunder » Thu Sep 13, 2018 2:20 pm

I’ve never had a hard pull arise from a credit limit increase with an existing credit card (Capital One, Citi, Chase). In fact, each company had a FAQ that specifically says they do not do a hard pull for a credit limit increase.

tesuzuki2002
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Re: Credit card advice

Post by tesuzuki2002 » Thu Sep 13, 2018 4:44 pm

BostonButterfly wrote:
Thu Sep 13, 2018 6:20 am
In my quest to simplify, I'd like to close a credit card that I never use. It does have an annual fee, so if it weren't for that, I'd just let it ride.

My first thought was that closing the card will hit my credit score, which I guess is fine, as I have excellent credit. I'd like to think it will be a temporary hit to the score. My second thought was that I should request an increase in credit limit on my other credit card that I do use all the time. (I use this card for travel points). The card that I'd like to close has a high credit limit, while the card I'm keeping has a fairly low limit. It seems like I should increase the limit on the card I'd like to keep, THEN close the other card. When I go online to request an increase in credit limit, it clearly states that this will result in an inquiry on my credit. Should I care?

(FWIW, we pay credit cards in full every month. I use one, wife uses two. Honestly, the credit limit seems like a security blanket to me. Although I likely won't NEED the higher limit, its the what ifs that always rumble around in the back of my head.)

Thoughts/advice?
I mean do you care? I have an 835 Score... It feels the same at a 720 score did to me. I open and close cards almost yearly so I don't have to pay the annual fees...

tesuzuki2002
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Re: Credit card advice

Post by tesuzuki2002 » Thu Sep 13, 2018 4:46 pm

Watty wrote:
Thu Sep 13, 2018 8:37 am
student wrote:
Thu Sep 13, 2018 6:46 am
snailderby wrote:
Thu Sep 13, 2018 6:44 am
Instead of cancelling the card, can you downgrade it to another card from the same company with no annual fee? If that's possible, you may be able to keep the old card's credit limit and account history.
+1. This is a standard strategy.
Another +1

You should really have more than one credit card for backup too especially when you are traveling since there can be a snafu where your card is declined or compromised and needs to be cancelled.

I have had credit cards unexpectedly declined just because some computer thought that my spending pattern was unusual and they put a fraud alert freeze on it. You may be able to get it unfrozen by calling to confirm that you are using it but that would be pretty awkward when you are at a restaurant or checkout line.
always have back ups!!! And some places only take AMEX, or ONLY VISA, or ONLY MA... (though this has changed in the last few years most places take any type of card now) But I've seen that problem before where they could not accept someone's card because of not having the capability...

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