Cancelling Credit Card After Switch?

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danielnash
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Joined: Tue Sep 27, 2016 9:10 am

Cancelling Credit Card After Switch?

Post by danielnash » Tue Sep 27, 2016 9:47 am

Hello All,

My wife and I currently have Blue Sky Preferred Amex credit cards. We have been using this card for about 8 years now and spend approximately $5,000 per month (paying it off in full every month and using the points we accrue for cash back on airline tickets we purchase). We have a $40,000 credit limit on the card and both have >800 credit scores.

We plan to switch to the Chase Sapphire Reserve Card given the significantly better perks and bonus points for signing up. For our spending habits and yearly travel, no other card seems to come close but would be happy to stand corrected if someone sees a better card - https://creditcards.chase.com/a1/sapphire/reserve

My question is...once I sign up and move my spending over to the Chase card, should I cancel the Amex card or keep it open? Would that hurt my credit score? On the one hand, we have 8 years history of spending on the Amex. On the other hand, keeping a credit card with a $40,000 credit limit on top of the $50,000 limit Sapphire credit limit would mean we have $90,000 of revolving credit capacity available. Which to my understanding, might be a negative to my credit rating as well.

Not sure what to do....looking for some advice!

123
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Re: Cancelling Credit Card After Switch?

Post by 123 » Tue Sep 27, 2016 11:29 am

Your post is silent on whether you have any other credit cards. If you don't I would suggest having 3 in case one is hacked/compromised or the issuer has a problem processing transactions.
The closest helping hand is at the end of your own arm.

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Earl Lemongrab
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Re: Cancelling Credit Card After Switch?

Post by Earl Lemongrab » Tue Sep 27, 2016 11:31 am

danielnash wrote:On the other hand, keeping a credit card with a $40,000 credit limit on top of the $50,000 limit Sapphire credit limit would mean we have $90,000 of revolving credit capacity available. Which to my understanding, might be a negative to my credit rating as well.
Why would you think that? Generally the more credit you have and use wisely the better your credit scores. Besides, you should have a minimum of two credit cards and probably more in case the cards become compromised, lost, or are unavailable for some reason.

Earl
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Jack FFR1846
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Re: Cancelling Credit Card After Switch?

Post by Jack FFR1846 » Tue Sep 27, 2016 11:52 am

Keep it open. I've got a couple dozen inactive cards that I no longer use. My credit score is 801.....would be higher but I churn credit cards for the sign up bonus, so open about a dozen new ones a year.
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gclancer
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Re: Cancelling Credit Card After Switch?

Post by gclancer » Tue Sep 27, 2016 12:54 pm

Earl Lemongrab wrote:Why would you think that? Generally the more credit you have and use wisely the better your credit scores. Besides, you should have a minimum of two credit cards and probably more in case the cards become compromised, lost, or are unavailable for some reason.

Earl
Correct. Higher credit limits = better. Average account age matters. I would convert it to a Blue Cash Everyday (no annual fee), put it in a desk drawer and forget about it.

bnes
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Re: Cancelling Credit Card After Switch?

Post by bnes » Tue Sep 27, 2016 1:24 pm

In general, for financially responsible people:
Keep your oldest card, for credit history reasons.
Always keep a backup card, from a different company. I keep two backups: one in the wallet, the other says at home.

Nummerkins
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Re: Cancelling Credit Card After Switch?

Post by Nummerkins » Tue Sep 27, 2016 10:05 pm

Do not close it. Your credit score is partially based on credit used out of credit available as well as average age of accounts.

Closing your Amex would be shooting yourself in the foot on both counts.

Plus, a backup card is a must for when you primary is stolen and shut down at the least convenient time.

Momus
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Joined: Tue Feb 21, 2012 9:23 pm

Re: Cancelling Credit Card After Switch?

Post by Momus » Tue Sep 27, 2016 10:43 pm

Don't close it. Your credit age determine your credit score. Also if you close it, it will lower your credit limit, thus lowering your score as well.

Put the card on auto buy 50 cents amazon gift card every month indefinitely. Throw the card in your safe. This way you will get a charge every month (to avoid account closing due to inactivity).

If your card has an annual fee, you can convert the card to a NO annual fee card before you do this.

MnD
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Re: Cancelling Credit Card After Switch?

Post by MnD » Wed Sep 28, 2016 8:28 am

Close it. Financially responsible people will not run their credit scores down into a range where it has any real-world consequences by properly managing their financial affairs, which includes closing unwanted and unneeded credit accounts for financial simplicity. We have always closed unwanted accounts and made any other changes to our credit accounts whenever it has in our best financial interest to do so, without regards to playing any "credit score games". Our scores are currently above 825. One year we replaced almost every credit card we had and refinanced our mortgage - essentially turning over our entire credit portfolio and I think our score got into the very high 700's for a short while till moving back up into the 800's.

There is no prize for having the highest credit score in your zip code.
Always paying your bills on time and avoiding excessive debt does wonders for credit scores as many people are unable to accomplish this.

bigred77
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Re: Cancelling Credit Card After Switch?

Post by bigred77 » Wed Sep 28, 2016 9:01 am

I vote keep it and use it only when you go to the grocery store and maybe even when you buy gas (6% and 3% respectively).

Its hard to beat 6% cashback on your weekly grocery trip. use the Chase Sapphire for everything else.

TravelGeek
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Re: Cancelling Credit Card After Switch?

Post by TravelGeek » Wed Sep 28, 2016 9:11 am

Not enough information. If you have no other cards, it definitely is a good idea to have a second (and perhaps third) card, for reasons outlined. Especially if you travel.

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