What is the best way to handle a credit card I don't intend to use?

Question

When I made a large purchase at a department store, I applied for their card in order to get the discount they offered. But I have no intent to ever use the card. Should I officially close the account, or just cut up the card and throw the pieces away? What is best for my credit? - Thanks

Answer 1

This is most common MISTAKE we see people make. Your intentions are well-intentioned....to save a little money off a store purchase.

However, please be aware of whenever you apply for credit, regardless of your motivation, you LOSE points off your credit score.

How many?

Typically, every 3-5 inquiries steal approximately 12-36 points off your credit score. If you have a 720+ FICO, this is not a big deal.

However, if you're going from store to store "earning" your discount, your FICO will suffer and you'll end up paying MUCH more in credit "costs" .

One other point relating to your question: If you have "seasoned" credit accounts -- even if you're not using them -- do not cancel them.

15% of your FICO stems from length of your credit history.

For this card, you might as well cut up the card and send a letter to the issuer requesting they report your canceled account as closed by applicant.

Make it clear YOU closed the account.

Whatever your age, maintain at least 3 active "trade" (credit) listings.

Get credit early, maintain it, and don't close it.

If you're interested in learning more about credit (saving money) and fixing your damaged credit, sign up for our free credit repair training (no strings attached...free means free).

Hope this helps,
Mike

Answer 2

I'm no expert in this arena, but from what I've read from the credit bureaus published information, just having credit available even if you don't use it, can hurt your credit score even though that makes no sense to me. If that is true, then it stands to reason that just cutting the card in half, does nothing to reduce the credit available to you, and you might be better off cancelling the account entirely.

Hopefully, someone with more knowledge than I will respond to your question and either confirm or dispute what I've told you.

Answer 3

Cut the card up and throw the pieces away. Now you don't have to worry about losing it, you will still get mail from the department store and maybe you might buy something again.

Answer 4

If you can trust yourself, and have some self control, file the credit card away and leave the account open. It will help build positive credit to have it open. If you already are established and have good credit, then you can close the account without it hurting you.

Answer 5

If you just chop up the card the account is still open and you will get monthly statements, could get scammed too. Closing an account can lower your credit score but depending on other factors it could increase it.

It's up to you but to keep from getting into more debt, close the account.

Answer 6

you should use the card for small purchases every three months. Pay off the balance, then close the account in a year.

That way, and active account that was always paid on time will be on your credit report for 7 years.

Ps, the three month thing is because some companies report inactivity...

Answer 7

Credit Card Debt Management: Credit cards are a great source of availing credit to meet your requirements. But they can lead to a debt trap from which you will find it difficult to come out. Hence you need to keep a close watch on your credit card expenses minutely

Answer 8

I suggest using the card a couple of times to buy something you would have paid cash for anyway - maybe once every six months - and then paying it off IMMEDIATELY. That way, you build up good credit, you have the card in case of emergency, and you don't owe anybody any money in interest.

Answer 9

If you're not intending using the card or Credit in the store again-
I recommend that you shred the card,and next time the store write you-Call them and cancel account.

This means that You can technically re-apply for the same card at another date(Without affecting your Credit Scoring)

Answer 10

I'd give it back to them and close the account. My grandmother had several credit cards and refused to pay the annual fee they charged because she said she hadn't charged anything on them. But that didn't stop the fees from piling up. She had to pay the fees before she could cancel the cards. Bad news!! Just close the thing and be done with it. Why take chances?