I have a few cards with no balance that I still have. Would it be better for my credit to cancel those accounts or to keep them open?

11/2/2007 12:16:02 AM

generally keep them open, from what i understand.

there is a point of diminishing returns, though, and probably even a point at which it's counterproductive.

11/2/2007 12:46:46 AM

it will boost your available credit to outstanding balance ratio
but also cc companies dont like idle cards, so you should use them and pay them off

11/2/2007 2:18:58 AM

from my (pretty basic) understanding, it depends on the cards.

Here's an example:

Card A - $0 balance, had the card for 5 years, limit of $5,000
Card B - $0 balance, had for 6 months, limit of $500
Card C - $500 balance, had the card for 2 years, limit of $2,500
Card D - $0 balance, had the card for 10 years, limit of $5,000

If you're talking about canceling the cards, the advice I've heard would be to keep card D, card C, and possibly card A (depending on what your circumstances are). Cancel card B as you've not had it for a long time.

In general (again, from what I've heard), you don't want to cancel your longest-standing card, as this effectively shortens your credit history. You also don't want a SUPER huge available balance figure, but you don't want a puny one either.

I could be wrong on this and I'm sure other people have heard different things, but those are the suggestions I've heard...

Here's a link to a blog for some further reading: http://www.thesimpledollar.com/2007/08/10/continuing-the-credit-building-discussion-cancel-cards-or-not/

11/2/2007 11:05:29 AM

Keep them open.

11/2/2007 2:44:01 PM

the longer you have a card the better your credit is over time (assuming you pay your bills)

i have 1 cc that i use all the time and a back up cc that i only use for emergencies or when i'm making large purchases

every now and then i'll put something on the backup card just to keep it "active"

if a creditor sees you have a cc that you havent used in months (or even years) they dont like that-- i got this from a homebuying book a read

11/2/2007 6:18:39 PM

leave them open... helps your debt-to-available-credit ratio.

11/6/2007 7:28:03 PM

Leave them open

After a certain point of inactivity the bank/issue party will cancel it, which is a lesser deduction that if you call and close it in 90% of cases. Never close a card that you still hold a balance on - the interest goes thru the roof, and you have 0 room for bargaining or negotiation at that point.

Your best bet is let the low limit & higher interest cards close themselves, and buy a tank of gas per month on the others to keep them active.
They also ratio in that highest balance they you've ever had on said card, so keeping a card that you've never charged anything on doesn't do a lot of good, other than the original deduction at the point you opened it.

11/9/2007 12:15:30 AM

this is pretty much all wrong (and as soon as i post real guidelines it'll just turn into an argument so i'll just keep it to myself and be smug)

no wonder people (in general) have such problems

and yes, I look at credit scores/reports and have to get letters when items aren't quite right and do multiple pulls to see how different changes in reports change the score (it's really pretty astounding how doing this and other challenges and changes right/wrong can move the score

[Edited on November 9, 2007 at 2:02 AM. Reason : not all wrong i guess, just wrong/conflicting enough to be useless]

11/9/2007 1:55:41 AM

^ what's the use in criticizing it without providing any useful information yourself?

11/9/2007 8:52:46 AM

Quote :

"if a creditor sees you have a cc that you havent used in months (or even years) they dont like that"

can anyone verify that? i'm pretty sure that doesn't have anything to do with your credit score, or credit worthiness. do credit reports even list "recent" activity? i know they show highest balance and stuff like that, but i dont remember anything that indicates if the card is being used every month.

Quote :

"After a certain point of inactivity the bank/issue party will cancel it,"

I have cards I haven't used in at least a year...I wonder when they'll cancel them...What about a 3K line of credit with Dell financial services? Should I close that or leave it open? I'm pretty sure I'll never have a need for it again.

Quote :

"this is pretty much all wrong (and as soon as i post real guidelines it'll just turn into an argument so i'll just keep it to myself and be smug)"

"i'm an expert but i won't contribute" = bitch move

11/9/2007 10:27:44 AM

Quote :

"After a certain point of inactivity the bank/issue party will cancel it,""

I have a couple of cards that I signed up for back in 1998 that I definitely have never used, nor even activated. The accounts still show up on my credit report.

11/9/2007 10:52:33 AM

open credit cards that don't get used hurt your credit

close them.

my dads been a loan / financial counselor for a while and daily shows people what their credit scores -could- be if they closed those accounts. an open account with no balance or no change in balance for more than a month is neglect and means you aren't in full control of your finances.



want proof? check credit and write it down. close the accounts and re-check credit. new credit will go up an extra 10-15 points per account.



Pretty sad to see that college grads don't even know this stuff yet.

11/9/2007 12:05:37 PM

and for those who think not keeping a balance for a long period of time is OK...


go ask any ept financial advisor or use just use common sense.. you should figure it out..

11/9/2007 12:07:18 PM

That's bad advice. If you have 5K in credit card debt and 15K in credit, your score will go down if you close a card b/c your utilization will go up.

11/9/2007 12:23:52 PM

^ I concer with that...but what if you don't have any credit card debt at all?

11/9/2007 12:53:00 PM

I still wouldn't close it because of #3

1. How you pay your bills (35 percent of the score)
The most important factor is how you've paid your bills in the past, placing the most emphasis on recent activity. Paying all your bills on time is good. Paying them late on a consistent basis is bad. Having accounts that were sent to collections is worse. Declaring bankruptcy is worst.

2. Amount of money you owe and the amount of available credit (30 percent)
The second most important area is your outstanding debt -- how much money you owe on credit cards, car loans, mortgages, home equity lines, etc. Also considered is the total amount of credit you have available. If you have 10 credit cards that each have $10,000 credit limits, that's $100,000 of available credit. Statistically, people who have a lot of credit available tend to use it, which makes them a less attractive credit risk.

"Carrying a lot of debt doesn't necessarily mean you'll have a lower score," Watts says. "It doesn't hurt as much as carrying close to the maximum. People who consistently max out their balances are perceived as riskier. People who never use their credit don't have a track history. People with the highest scores use credit sparingly and keep their balances low."

3. Length of credit history (15 percent)
The third factor is the length of your credit history. The longer you've had credit -- particularly if it's with the same credit issuers -- the more points you get.

4. Mix of credit (10 percent)
The best scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans. "Statistically, consumers with a richer variety of experiences are better credit risks," Watts says. "They know how to handle money."

5. New credit applications (10 percent)
The final category is your interest in new credit -- how many credit applications you're filling out. The model compensates for people who are rate shopping for the best mortgage or car loan rates. The only time shopping really hurts your score, Watts says, is when you have previous recent credit stumbles, such as late payments or bills sent to collections.

"Then, looking for new credit will be seen as an alarm because statistically, before people declare bankruptcy and default on everything, they look for a life preserver," Watts says. Also, if you have a very young credit file, an inquiry can count for more than if you've had credit for a long time.

http://www.bankrate.com/brm/green/cc/basics2-4a2.asp?caret=13

11/9/2007 1:41:00 PM

chase got uber pissed at me and reported me to a fucking collection agency after just a month

so now my credit is in the fucking shitter

11/10/2007 4:44:45 PM

You couldn't even make the min payment?

11/10/2007 5:13:55 PM

Quote :

"an open account with no balance or no change in balance for more than a month is neglect and means you aren't in full control of your finances."

That statement doesnt work with my experience. I have complete control of my finances. My score is over 800, and I have a combined credit limit of over 75,000 over 4 cards. Having more than one card gives you options when another card company tries to shaft you. I have a total balance of less than 2k on one card (visa). The rest sit dormant. Since I have had a credit card ever since I was 18, I am pretty savy. I check my credit report around once a year and fix any inaccuracies. The one thing I have noted is since consolidating my debt onto one card and paying off revolving debt, my score has gone from around 720 5 years ago to over 800 today. I dont think I have opened up a new credit account in the past 5 years, so its all the same card. What I have done from time to time is TRANSFER balances from one card to another when special rates come out. Before they started charging balance transfer fees that are the rage now, this was an easy way to minimize interest.

Going to the original posters question, if you have a few cards out there that have no balance, and you have less than 7 years of credit history, then I would leave the card that you have the longest history with open, and 'consider' closing the rest. If you have more than 4, I'd prune it back. If some of the cards were 'starter' cards with high interest rates, then I'd close them out. If they are issued by the big banks, then I'd keep them. Its also not a bad time to call the bank and ask for lower rates (they'll almost always give you a lower rate).


[Edited on November 13, 2007 at 3:30 PM. Reason : .]

11/13/2007 3:24:36 PM