Closing credit card accounts. How, why, and does it hurt credit?

Question

My husband has the following accounts:

1. Am. Express Bal $1100 (Blue) - Est 6/2006
2. Cortrust Bank Bal $200 Credit Limit $300 Est 3/2007
3. First Savings CC Bal $175 Credit Limit $300 Est 4/2007
4. Credit One Bank Bal $100 Credit Limit $250 Est 4/2006
5. WAMU Bal $800 Credit Limit $1000 Est 7/2006
(I am a secondary card holder)
6. First Premier Bal $150 Credit Limit $250 Est 9/2005
(I am a secondary card holder)
7. Capital One Bal $500 Credit Limit $1000 Est 04/2006

I am tired of the nit-picking payments to mail every month so I am wanting to know which ones would be best to pay in full and close? Or get a new account with a balance transfer on some of these then close the accounts.

All have been paid on time. I am just sick of 7 different bills mailed each month plus utilities it makes it a check writing nightmare. Cortrust, First Premier, First Savings, and Credit One charge for online bill payment so it isn't worth it. The other ones I pay online most the time.

Thank you!

Answer 1

Without knowing what your scores are, if you have any major baddies on your reports or if you had just started building your credit since 2005, it makes it a bit difficult in saying what you should or shouldn't do.

But if you qualified for the Amex Blue your credit should be somewhat decent.

The utilization on your individual cards and your overall card utilization is really hurting your credit.
The high utilization you are carrying on all of your cards could work against you in being approved with a prime company.
You should try to lower the balances before you start applying for better cards, try to get them at or below 40% of the credit limits.

Normally it's not a good idea to close your oldest accounts, but... most of your accounts are with subprime lenders and it would probably be in your best interest to weed them out. (First Premier, Cor Trust, First Savings and Credit One)

Keep the Amex, WAMU and the Cap One (as long as you are not paying annual fees on the WAMU or Cap One, if you are and they refuse to waive the fees, you might save them for the last of your weeding)

Before you start weeding them out you should apply for replacement cards with better credit companies.

Then start working on getting the subprime cards paid off so you can close them before the next annual fee is due.

Don't close all of the cards at one time. .
Closing the accounts will ding your reports and if you close them all at once you will make the other creditors nervous (especially Amex)
Try to space your closures out to one every 4 or 6 months or so.


Again, without knowing your scores or if you have baddies on your reports it is hard to say who you might apply with.

If your scores are fairly decent, at least 600 or higher and if you have no major baddies on your reports or if you do they are at least a couple years old, you might look at Juniper Carnival Sea Miles or Chase Freedom. You should also check with your bank or credit union to see what they offer. If you don't belong to a credit union you should join one.

You might also, at some point, get a store card and maybe a gas card to round out your reports.

Answer 2

My credit union doesn't charge for online payments, and neither does Suntrust Bank. Also, a lot of the companies will take automatic payments out from your bank account automatically. That said, closing accounts that were opened in the last year won't hurt you. Keep about four major credit cards, no more. Capital One tends to hurt credit, so I'd close that one. Close the low-limit ones, because those are the ones that don't help your score. If you're going on a credit closing spree, close only one account every month or two, not faster. It hurts credit to close accounts because they want to see longevity of credit and that you're debt-to-credit ratio is high. It would be better to get your limits raised so that you have a lower debt-to-credit ratio. Perhaps you can negotiate with the companies: call and say you want to close some cards with low limits and high rates or fees. They can raise your limit or lower the percentage rate that you pay or waive your annual fee, or they'll be the ones you close. Get your free credit report at www.annualcreditreport.com, but get only one report at a time. Wait four months and get another to see how you're doing. You can also get a credit score for 30 days for free through www.transunion.com or one of the other agencies, but remember to cancel it before they start charging for it. Good luck!

Answer 3

Absoilutely do not close your credit card! And don't let it lie dormant. Every couple of months charge something small on it and PAY THE BALANCE OFF. Even better, try paying basic bills like electricity / cable with your card. The first trick is to USE the credit card. The second trick is NEVER EVER pay it late. Trust me on this. 10 years ago I couldn't get a credit card and I had a travelling job so life was absolutely miserable. Now my median score is 790, my low score is 750 and my highest is 830

Answer 4

You've already gotten good answers to consolidate. Pay off the highest interest accounts first and close the credit card accounts as you get them paid off. Keep 2 active, in case someone "steals" your credit card info and you have to close the account and wait a few days for a replacement card...then you can use the other.

It goes without saying that you should pay credit cards off each month, but sometimes that is easier said than done. I have accounts that rebate me 1% or higher for every purchase I make, so I buy everything I can with the card...even house or car insurance...but I always pay it off monthly.

Every open card you have counts against you in one respect, available credit. If you have 5 cards with $5000 limits or 2 cards with $5000 limits, the 5 cards will result in a lower credit score. Of course Zero cards will also ding you as not having enough credit established. It is kind of a fine line to walk....

Looks to me like some of those accounts you have could be used to pay off others, thus reducing your number of accounts. Even bill-paying online (free checks and postage) is still a pain with so many to pay.....

Good luck!

Answer 5

If you really want to close credit card account(s), I suggest you keep the older account(s) open and close the newer one.
One thing that effect your credit score is the length of your account(s).
Another suggestion is that if you really want to increase your credit score, one thing you can do is lower your balance. In my opinion, your balance to available credit ratio is too high.

Also, unless you can get a new credit card with higher balance and lower interest rate, i wont suggest you to get a new account with a balance transfer on some of those then close the accounts. First you have to pay transfer fees, secondly, the ages of your credit history will change as well.

Answer 6

You can start paying online, it's secure and fast. I was sick of writing checks as well, and started paying on line years ago, no problem. Just make sure your computer has a firewall just in case.
First, you should pay off the accounts with the higher interest rate first.
Secondly, DON'T CLOSE ANY ACCOUNTS, it will hurt credit score.

Answer 7

Don't close any accounts.

Pay them off but leave them OPEN. Closing your account reduces your amount of available credit. Your amount of available credit (factored in with other variables) positively affects your credit score. I know this because I have credit monitoring once a month and I get a break down of the positives and negatives on my report. One thing that comes up for me is that I "have a healthy cushion of available credit". Had I closed down my accounts, there would be less of a cushion-see?


Heres an article about that. It gives the pros and cons of debt consolidation and how closing an account will affect your credit rating:

http://www.lendingtree.com/smartborrower/Ask-an-Expert---Credit/Debt-consolidation-and-your-credit-.aspx

Answer 8

Get a consolidate loan and pay all of them off. Make one payment and make your life simplier.