What to do with this card

**mommyof4** · 04-09-2009, 10:57 AM

Keep the card open, even if you're not using it. Your FICO will get dinged if you close the account, especially if you have a good payment history with the card. I've got a few CC companies that I'm not real happy with, either, but they are paid off in full, and I have an excellent payment history with them, so I leave them open to help my credit score. I would recommend getting another card if you feel like you need to, but is there anyway you can just pay cash for things, and not play the credit card game at all? That's what I'm basically doing at this time.

**boosami** · 04-09-2009, 11:17 AM

Originally posted by geojen View Post

1) close this card and get a new one
or
2) leave the account open but not use the card and get a new one.

Which strategy is best? Keep in mind that this card has the highest limit of all my cards.

Closing an account is not a bad thing, and FICO does not punish you directly for closing an account. However, because of the way FICO calculates the score, it is possible that your score will go down if you close an account under some circumstances.

Do you carry a balance on any other revolving trade lines? Closing the account will have no effect on your FICO immediately if you have no other revolving CC balances. The account history will stay intact on your FICO for 10 years after closing the account. If you have other revolving credit lines with zero balances, losing one trade line's history will not affect your FICO when it does drop off in 10 years.

If you carry a balance on other CCs, you should keep the card open. That way, your available credit is higher, which makes the balance you are carrying look smaller in proportion.

FICO uses credit utilization to determine a big chunk of your score. Simple example, I have two credit cards, each with a $500 limit.

If I have a $0 balance, I am using $0 of $1000 total. That's 0% utilization of my credit. In this case, I could close one card and still have 0% utilization. FICO doesn't see a change.

If one card has a $500 balance, I am at 50% utilization. If I close the PIF card, that ratio rockets to 100% ($500/$500), which would hurt my score. In this case, I should leave the account open.

**geojen** · 04-09-2009, 11:20 AM

Originally posted by boosami View Post

Do you carry a balance on any other revolving trade lines? Closing the account will have no effect on your FICO immediately if you have no other revolving CC balances. The account history will stay intact on your FICO for 10 years after closing the account. If you have other revolving credit lines with zero balances, losing one trade line's history will not affect your FICO when it does drop off in 10 years.

If you carry a balance on other CCs, you should keep the card open. That way, your available credit is higher, which makes the balance you are carrying look smaller in proportion.

I have a little bit on a card that I use for business purchases--waiting for the expense reimbursements and all that. The only other thing is that this card is my highest limit. My other cards have limits of 6000 and 4000. I could probably call and request this limit be raised, I just have never bothered. Would that help?

**boosami** · 04-09-2009, 11:28 AM

List all your revolving accounts, with limits and current balances. I'll be able to tell you how much you'd be affected if you closed that card.

**swaymonae** · 04-09-2009, 12:53 PM

Leave it open.. closing the card isn't going to hurt them, but it will hurt you..

**puck36** · 04-10-2009, 07:55 AM

I would close the account becuase if you leave it open someone might get ahold of the number and start using it and it will be a big problem for you down the road.

**noppenbd** · 04-10-2009, 08:42 AM

You should also keep in mind that even if you pay off a credit card every month, the statement balance is what is reported to the credit agencies. So if you charge $2K out of $5K on a card, even if you PIF every month, you will still be showing 40% utilization on that card. In that sense it doesn't matter if you "carry a balance" or not, just what your statement balance is each month.

**boosami** · 04-10-2009, 08:45 AM

Originally posted by puck36 View Post

I would close the account becuase if you leave it open someone might get ahold of the number and start using it and it will be a big problem for you down the road.

Fraud is a very remote possibility, and you won't be liable for the illegal charges. I have never experienced in on over 20 credit cards for 10 years, and I do not take any steps to safeguard myself. If it keeps you up at night worrying about it, though, that's certainly a valid reason to consider closing an account.

**puck36** · 04-10-2009, 10:04 AM

I just don't use credit cards and have not used one in 8+ years.

**kork13** · 04-10-2009, 03:48 PM

Originally posted by boosami View Post

Fraud is a very remote possibility, and you won't be liable for the illegal charges. I have never experienced in on over 20 credit cards for 10 years, and I do not take any steps to safeguard myself. If it keeps you up at night worrying about it, though, that's certainly a valid reason to consider closing an account.

In spite of the "it'll never happen to me" attitude (to be clear, I'm not overly concerned about it either), I'm still of the opinion that it's better to close an unused account. I have one unused card right now, and because it's unused, I ignore it--I don't check the balance/activity, so if a false charge were to show up, I'd never be aware of it in time to take action against it. Thus, for this unused card I have, i'll be closing it down probably next year sometime (after my next move this Dec, so that having closed it won't affect my credit for getting a new place, etc). Potentially not necessary, but I still would feel safer having it closed.

**tomer** · 04-12-2009, 09:40 AM

IMO, save the card, even if it will be out of use. Try to avoid dealing with credit card companies.

**geojen** · 04-13-2009, 06:56 AM

Here are the accounts and "balances" --all pif each month, except the MSU visa.

MSU visa--4000 limit, 750 on the card, will pay this off in a couple of months when the 0 interest period is over

Citi MC--the one in question--8500 limit, right now, a 2100 balance, pif end of month

Cabelas visa--6000 limit, 0 balance

JcPenney Visa, no idea what the limit is, 0 balance. I never use this card.

Walmart discover, 2500 limit, 0 balance. Never use this card.

Home Depot Card, 4000 limit, 0 balance. Occasionally use this card to take advantage of the no interest no payments for 6 months feature.

**boosami** · 04-13-2009, 08:21 AM

Your total credit available is $25,000. Usage reported is $2,850. You are using 11.4% of your credit. If you close the card and replace it with another card with a limit between $5,500-$11,500, your usage will affected less than 1.5 percentage points. Your credit score will not be significantly affected because with that change in utilization.

If those figures represent pretty average monthly usage for you, and you are sure you can get a credit limit over $5,000 with your replacement card, get the new card and close the other one. It will not hurt you significantly or at all to close it an open a comparable card.

**geojen** · 04-13-2009, 11:40 AM

Thanks Boosami, great advice.

What to do with this card