Cancelling a credit card the right way.

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T

Tzu

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I have a new credit card from my credit union and would like to cancel the account of my old card that has went through 3 different bank owners. The old bank card was an interm card issued because I have no other accounts with them except for the card. They always wanted to upsell me new checking/savings accounts and the overly complicated point system of a new card from the bank lost my interest.

By comparison, my credit union who I've dealt with for over 20 years has been a pleasure to deal with. Local, small, fast and friendly for me is great. The new card is already active, but I hear it may hurt your credit score if closed improperly. My credit is very good so I hope it won't be a problem. BTW, the old card was the first and only card (up until 2 days ago) that I have ever had.
 
Best bet is to leave the card open with no debt on it. Leaving credit lines open leaves a longer, older credit history, and that helps improve your score.

Having said that, if you must close your account, call them up and tell them you want the account closed and "marked closed at consumer request". That way, the credit reporting agencies will make a note that you closed the account, not the bank, and so won't impact you negatively.
 
It hurts more to open a new card than close an old one. When one gets opened they will do what is called a hard check on your credit which stays around.

I open and close card all the time and have a credit score around 800. Probably had 50 cards over the last 30 years.
 
I do believe I forgot to ask my question:
blush.gif


-Do I have to phone in or can a letter be sent to cancel instead?
-Are there fees involved to cancel?
-Do I send the shredded card back as evidence?
-Will it hurt my credit score?

Thanks for any tips guys...
 
The age of your credit has a big impact on your score, that one "old" card is a good boost to your overall score, i recommend you keep it open and use it minimally. I understand having 2 revolving accounts or 2 credit cards is the ideal amount to maintain a good score, but if you must close it prepare for your score to drop, albeit minimally and temporary it will show up.
 
Originally Posted By: Tzu
I do believe I forgot to ask my question:
blush.gif


-Do I have to phone in or can a letter be sent to cancel instead?
-Are there fees involved to cancel?
-Do I send the shredded card back as evidence?
-Will it hurt my credit score?

Thanks for any tips guys...


-Call is fine
-No fees to cancel
-No, you shred the card, they don't need it back
-sort of.. you're closing your oldest line of credit, and so shortening your credit history. Better if you left it open with no debt on it.
 
No fees, many will cancel now online through their chat or with a phone call. Just destroy the card. The account will still be active for charges if there are any legacy billings for it but no new charges by you.
 
I would keep the old credit card open assuming there are no yearly fees. These days you need two or three cards so you do not get stranded with only a single card that gets shutdown due to fraud detected.

The hard pull to view your credit will not hurt as long as there are not many others. The opening of a new account could effect it slightly but probably not much assuming its the only new account.

Where closing an account can cause a drop in credit score happens because of the following: You have two credit cards, each with $2000 limit, and one card has zero balance and the other $1000 balance. You are using 25% of your total credit card limit. A little high, but not a real problem. Now cancel the one with a zero balance and now you are using 50% of your total credit card limit and that will take your credit score down.
 
Originally Posted By: Lolvoguy
always keep your oldest card in good standing. It really looks good on you credit history!


I have been using Credit Karma for about three years now. They are not 100% accurate as I get higher credit scores from other sources.

I always get a D score on my credit rating for length of credit history. This is even though I have a long term credit cards with Discover and American Express; plus 15 years with the same accounts.

This leads me to believe that Credit Karma is funded by Visa and Mastercard as those two are the ones I will get 0% offers from, use up the free credit and cancel.
 
Originally Posted By: Lolvoguy
always keep your oldest card in good standing. It really looks good on you credit history!


Absolutely this. DON'T CLOSE THAT ACCOUNT!! You gain nothing by doing so.
 
So if I was to put my old card away in a safe with zero balance, that will still reflect good credit even if unused? The main reason I was thinking of cancelling the old one was for the simplicity of having only 1 card. Truthfully, I've had it so long that I don't remember if there are fees just to have it. I'm guessing not?

How often would I have to use the old card to keep it active, if that is what is best (use it a couple times per year)? As long as I know about what I have on it at any one time, I can spend accordingly. Getting a little forgetful with 2 cards could get me in trouble easier, but I'm pretty conservative when it comes to using them in the first place. Thanks for the tips guys. It helped me.
Originally Posted By: SHOZ
Originally Posted By: Lolvoguy
always keep your oldest card in good standing. It really looks good on you credit history!


I have been using Credit Karma for about three years now. They are not 100% accurate as I get higher credit scores from other sources.

I always get a D score on my credit rating for length of credit history. This is even though I have a long term credit cards with Discover and American Express; plus 15 years with the same accounts.

This leads me to believe that Credit Karma is funded by Visa and Mastercard as those two are the ones I will get 0% offers from, use up the free credit and cancel.
 
Some banks get crabby if there is too much inactivity. Just buy a pack of gum once a year or so and it'll keep the card active. Otherwise, I'd keep it open and leave it at that.
 
Originally Posted By: bubbatime
Originally Posted By: Lolvoguy
always keep your oldest card in good standing. It really looks good on you credit history!


Absolutely this. DON'T CLOSE THAT ACCOUNT!! You gain nothing by doing so.

exception: credit cards with low limits and yearly membership fees.
i cancelled a few of those.
my surprise checking my credit: my first item was the power company on my first rental agreement.
OP, once/twice a year, do a gas tank and carwash. the bubblegum pack may/may not trigger theyr low activity triggers....
 
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