Quote:
Originally Posted by mlmpetert
I wouldnt close out any credit card you dont need and use, unless youre going to get hit with some sort of inactivity fee.
If you have access to excess credit that’s a good thing on your credit score. Part of the calculation is based off of available credit vs. credit actually used. So lets say you carry a 500 balance on something youre paying off on your favorite (cheapest) credit card with a limit of 1000. Then you have a credit card that you don’t use (has a high rate) but also has a limit of 1000. So the amount of credit youre using vs. how much you have available is 1 to 4. If you cancel that one card you don’t use your ratio drops to 1 to 2 and you now appear more extended then previously. It may not be worth signing up for a new credit card just to up your ratio and available credit (especially within a year of major financed purchase), but its almost always a bad idea to cancel a card that you don’t use but helps your ratio and subsequent score.
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Good post, and very true. What I do is as my 0% introductory rate offers are nearing an end, I find another credit card with a similar or higher limit with a fancy intro offer, open an account, and subsequently close the card with the expiring 0% offer. That way when I close one card and open another, my ratio either stays the same or gets better, depending upon the limit of the new card.