Cancel the credit cards are not?

[maslex]

Quick backstory. I have one major credit card and 3 "store" credit cards. One store card has a zero balance. Once has a minimal amount on it and the other store card & major credit card both have a significant amount (they're both under $1000 but still a lot for me).

I'm wondering what the best way is to deal with them once I pay them off. I know for sure that I'd like to close out my major credit card. I have already shredded the damn thing up, months ago. I have come to terms with the fact that I am NOT the type of person who can be trusted with a card LOL I've gotten myself in way over my head and now I'm trying to dig myself out. I am not the type who can have a card "just for emergencies" or pay with a card and then pay it off at the end of the month. I get it.

But I've heard that if you cancel a card once it's paid off then it goes against your credit or something like that? Is it better to just keep the card active with no balance or is it okay to cancel them?

 

[Tee it Up]

Your credit score will take a significant hit if you close the account. If you think you will misuse the card put it in a container of water and freeze it. That way you will have to thaw it out to use it and will help you resist making a hasty purchase. Once a year or so, use the card to make a small purchase and pay it off right away. That way you account will still be active and your score will be better.

 

[sam_gordon]

Quick backstory. I have one major credit card and 3 "store" credit cards. One store card has a zero balance. Once has a minimal amount on it and the other store card & major credit card both have a significant amount (they're both under $1000 but still a lot for me).

I'm wondering what the best way is to deal with them once I pay them off. I know for sure that I'd like to close out my major credit card. I have already shredded the damn thing up, months ago. I have come to terms with the fact that I am NOT the type of person who can be trusted with a card LOL I've gotten myself in way over my head and now I'm trying to dig myself out. I am not the type who can have a card "just for emergencies" or pay with a card and then pay it off at the end of the month. I get it.

But I've heard that if you cancel a card once it's paid off then it goes against your credit or something like that? Is it better to just keep the card active with no balance or is it okay to cancel them?

My understanding (based on the credit report my CC provides) it's better for you (in regards to credit score) to have a long term credit line (like over 25 years).

Why does the age of your accounts matter?
The age of your oldest credit account shows lenders how much experience you have handling credit, hinting at your overall reliability.
Credit Tip
Keep your oldest accounts open and in good standing to lengthen your credit history and help your score.

It supposedly has a "very high impact" on your score. Whether this is true or not, I don't know.

 

[jen7233]

Closing the accounts may impact your credit score. I have closed credit cards many times, but still have a high credit score from other accounts. I listen to Dave Ramsey's podcast, and he doesn't advocate the need for a credit score because he doesn't believe in borrowing money, period, and that just having a card takes the personal transaction out and is not the same as cash so you want to spend more. I personally carry a card for convenience and purchases so I suppose I'm a terrible listener, lol, and even though he advocates using a debit and says it doesn't matter if you get the number skimmed because it's essentially a VISA, I don't feel comfortable. I just can't bring myself to use a debit card anywhere but the grocery store and the ATM because I've had my number skimmed several times on VISA and just feel much better having a card with a completely different company than my bank.

On the other hand, there are those that do advocate a high score because of rent, mortgage rates, insurance rates, loan rates, etc. You may have to look at some of the other things in your financial forecast down the road and future plans to see if for you, having a high score may be required.

 

[sonnyjane]

Pay off the cards in order of highest interest rate (typically store cards are sky-high) and then don't use them but keep them open. Yes, your debt-to-limit ratio and credit history make up about 1/3 of your score, so closing your cards would be a mistake. Hide them if you don't trust yourself, but don't close the accounts.

 

[Marchand63]

Don't close the major one!!!! I did this years ago after a divorce. Figured I would pay off debt, close cards, gather lots of savings & pay everything cash. BIG MISTAKE!!!!!

When I went to buy a new car, guess what, I had no credit. My rating was basically non-existent. I had to spend a couple years rebuilding credit with a high rate loan.

Best advice I got was keep it open, keep a small balance on the card. Use it at least once a month & pay it down but always keep a balance on it.

Banks want to see you are reliable to pay a debt not that you have none.

 

[Boardwalk Jedi]

Keep one or two around. I no longer have a major card which scares the heck out of me to look at my credit score when DD heads to college next year. At the same time, I like not having debt also. DH keeps two on hand for emergencies. Again though, we took a long time to pay off some debt and it's a great feeling.

 

[loves to dive]

I haven't used my store cards for years, I never closed them and eventually the stores started closing them. I keep two major credit cards open, one I just use about every 6 months with about $20 and pay it off, the other I use all the time instead of paying cash for things because I get cash back, I also pay it off every month. I've paid off all my other debt, house, car etc. I checked my credit score the other day and it is very high. It took a dip when I paid off the house and the car but is back up again. I'm at an age where I won't be buying another house and most likely not another car so for me it's just a matter of pride.

 

[iivye]

I would only cancel if there is an annual fee. Some that do have annual fees can usually be downgraded to a card with no fee. If there isn't an annual fee I would leave it open.

 

[momz]

I would pay off the store card first and close it. Also, I would pay off the major card but keep it open. I have a MasterCard that is used to book flights, reserve hotels, rent cars and use for making purchases when out of the country. I feel safer using credit for those things just in case my account gets breached. But, I pay if off when I return home.

 

[nkereina]

I agree with PPs. The amount of available credit you have (debt to credit ratio) and length of credit history are big factors in determining your credit score. Keeping your older ones open, even with a zero balance, are good for your score.

 

[DiannaVM]

I am not in the US, so I have no idea how credit scores etc work there, but my vote would be against closing them, especially the major one. Work on your plan of paying them off and try to keep the balances low.

Usually what I do is, unless I can't use my pre-paid credit card, I don't use my credit card to purchase things unless I have the money saved to pay it off right away. That has helped me from spending frivolously. Unfortunately life happens and we have acquired a balance that I can't readily pay off at the moment, but I look at credit cards as a loan to myself and make myself liable for paying it all back. Also, I should point out I only have one credit card (shared with my husband and it has points), my other card as I said is pre-paid so its not technically a line of credit, but just another savings set aside strictly for trips or "on the whim" purchases (if I dont have enough on the card, its not get brought. Simple).