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I closed several (about 6 or 7) seldom used credit cards about a year ago in a single shot and my score actually increased. But an important point to note is that I don't have any debt at all. If you have balances then your score may infact decrease but otherwise there is nothing to worry about closing cards.
Closing a credit card does not shut down credit history (I think Suze Orman claims it does), that is just wrong. Obviously, the closed credit card does not ADD to your credit history but existing history is retained for 7 years until the closed account falls off your report.
I closed several (about 6 or 7) seldom used credit cards about a year ago in a single shot and my score actually increased. But an important point to note is that I don't have any debt at all. If you have balances then your score may infact decrease but otherwise there is nothing to worry about closing cards.
Closing a credit card does not shut down credit history (I think Suze Orman claims it does), that is just wrong. Obviously, the closed credit card does not ADD to your credit history but existing history is retained for 7 years until the closed account falls off your report.
I am in your situation as well with my only debt being my home. Everything else is paid off. I have had many debts at other times in my life and closed out multiple credit cards during that time and it had very little effect at all. This is not something people should stress about. If you are being forced to hold onto a CC because you are in fear if it impacting your credit rating, something is seriously wrong.
If my card decides to charge me an annual fee, I'll just start paying with cash. All that a CC is doing is buying me a 1-month grace period to pay back then.
Do I think they should charge an annual fee? Not really. They are earning something for every swipe. And they take a bit of gamble, waiting for that inevitable(?) day when you slip up and they hit you with the finance charges and late charges.
If my card decides to charge me an annual fee, I'll just start paying with cash. All that a CC is doing is buying me a 1-month grace period to pay back then.
Do I think they should charge an annual fee? Not really. They are earning something for every swipe. And they take a bit of gamble, waiting for that inevitable(?) day when you slip up and they hit you with the finance charges and late charges.
Excellent point that I didn't think of. They do look at it as a gamble and hope you will slip up. Once you do, they can make quite a bit of money off of you. It has at one time or another happened to EVERY SINGLE PERSON I have ever known.
This is not true. Every time you make a purchase on the card, the credit card company charges a fee to the merchant. So even if you pay off the balance in full each month, the credit card company still makes money.
Also, I'll be more than happy to agree that banks can do this to make money for providing this product when the law forces car rental companies, hotels, etc. to let you use cash or debit cards so that you have a choice if you don't wish to pay for having a credit card. I know many of the "pay off each month" kinds of customers only really have credit cards to begin with because of needing one to rent a car, etc.
Round and round you go user id. You are still not making much sense at all. Closing a credit card will not have a dramatic effect on ANYONES credit rating. Key word here being dramatic.
And to say it again this is wrong. The major issue here is the utilization portion of your credit score. I already gave you an example where one would see a "dramatic" change in their score. Also, by "dramatic" I mean a shift that may would put you in a different credit category. If you upped your utilization to 50% your score would drop to the 750~780 range depending on the other details.
You are so stuck on your "the banks are trying to *********" mind set you don't even bother looking things up! Enter all reasonable credit information in this FICO estimator:
Then up the utilization to 50~60% and you'll find that it drops your score anywhere between 50~100 points.
Quote:
Originally Posted by ufcrules1
she doesn't need the credit card for emergencies and it will not have a big effect on her credit.
Credit cards are very nice to have for emergencies. In terms of it effect her credit that depends on the details! What you are suggesting is simply wrong, of course you'd realize that if you spent even a minute reading about it.
Now you can continue to spread your misinformation all you wish, but what you are stating is wrong. You are ironically doing the same thing you are essentially complaining about. The situation is more complex than the simple banalities that get stated, "closing your credit card with hurt your score" or "closing credit card with not hurt your score". Different sides of the same coin.
I have a BofA Card which I paid off every month. They then tried holding the payments so I would be late. Then I started paying by computer and put a Credit balance large enough so the account never hit zero. My Credit Score went down 10 points. Last month they waited until two days before the billing period ended and mailed me a check for the credit balance. I caught them and immediately replaced the money.
Also, I'll be more than happy to agree that banks can do this to make money for providing this product when the law forces car rental companies, hotels, etc. to let you use cash or debit cards so that you have a choice if you don't wish to pay for having a credit card. I know many of the "pay off each month" kinds of customers only really have credit cards to begin with because of needing one to rent a car, etc.
I use my credit cards for everything since it is safer than cash or debit cards. I also get extended warranties, and free rental car insurance. I am diligent in paying them off every month, and I have never had to pay any interest on either card.
Also, I'll be more than happy to agree that banks can do this to make money for providing this product when the law forces car rental companies, hotels, etc..
Renting a car, staying at hotels are not rights. What business does the government have in making a law that dictates what forms of payment a company takes?
Accepting cash payments is problematic for a number of businesses, if a car rental company did it they would have to take a deposit.
Also is there something wrong with check cards? Hotels, car rental companies, etc will accept check cards. Of course, they will often put an authorization on the card greater than the likely bill so you'll need to keep extra funds in your checking account.
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