Should I close or keep open credit card accounts?

Question

I have two of those rip off credit cards, First Premier and Applied Bank, I paid them off in full, will it hurt my credit to close both accounts now? They are the only cards I currently have, as I am trying to establish some kind of history. However they are rip offs and charge me just to have an open account with them. Any suggestions would be appreciated.

Answer 1

5 things make up your credit score:

Payment History: 35%
-if paying on time, and most weight is on your largest payment (ex: mortgage)

Balances Carried: 30%
-if your balances on your CC's are over 50% then it will negatively affect your credit score bc it looks like you are living beyond your means. However, if you "spread" that balance around to other cards and do not exceed your 50 % limit, it will look better. (Only in this case is having more cards beneficial...this does not mean open 5 new CC)

Credit History: 15%
-longer credit history = higher credit score
-never close credit accounts-especially if long history

Mix of Accounts: 10%
-ideal to have installment and revolving accounts which means having credit cards (revolving) and mortgage/car loans (installment)

Inquiries: 10%
-Each inquiry averages 5 points
-If shopping around for a house or auto, it will only count as 1 inquiry IF within 45 days even though multiple places have have checked
-If not shopping around, but have a lot of inquiries, only first 10 inquiries count each year, after 10 it will not affect your credit score


Now this all being said, you are worried about your credit cards because it is a "rip off" card, which I think you mean has an annual fee. Usually credit card companies offer credit cards to people with bad credit history with a catch which includes a very high APR% or an annual fee. Some CC with lots of cash back or points benefits charge an annual fee.

Call your credit company and see if you can get these annual fees removed if you have kept a good credit history while having these cards. This is because again, companies can offer the same cards to people with good credit history with no annual fee and high APR%, so see if you can qualify....if not...

If you have NOT had these credit cards for a long time, I would cancel them, but shop around first to see if you can get another CC with no annual fee. Capital One is a good one. If you can, get that CC before you cancel your cards, once you have received it, close your other 2. If you cannot get another card with no annual fee, close the one you have had for the shortest amount of time. Stick with the other one for at least a year before you try to inquire about another card. It might even take up to 2 years to be qualified for a better card. Sorry so long.....hope this helps!

Answer 2

Do NOT close them both at the same time. I closed 4 accounts in 6 months and still had several college loan accounts open and two other credit card/department store card accounts open and my score dropped 100 points when I checked it about three months after closing the last of the four.

I had a First Premier account, and it was only $60 a year to keep it open. It would be worth it to me to keep my score up. You might try closing one, then about 3 YEARS later close the second one. In the mean time get yourself a no annual fee card.
Also, you NEVER, EVER, EVER want to close your oldest account - EVER. That's one of the ones I closed and it's been 3 1/2 years now and my credit is still barely in the "fair" region, whereas before it was solidly in the "good" region.

Answer 3

a good portion of your credit score (like 1/3 or more) is based on how much credit you have used versus how much you currently have available... if you have say $2000 available on these cards and don't have anything charged on them, this has a very positive impact on your credit score.

as opposed to, say, having $2000 available and $1900 charged on the cards, which would have a very negative impact.

since credit cards are revolving credit, paying off the accounts and closing them does nothing to boost your score... as opposed to a fixed loan, such as a car loan.

i would suggest you keep these cards open, with zero balances, apply for a new card with no annual fees, and then close the newest of the two cards.

the amount of time you have had an open account also makes a big impact on your score. keeping the oldest of the cards will help boost your credit score.

Answer 4

Okay, now that everyone has thrown the statistics at you...

Those two card companies will "never" work with you and reduce or fully waive the fees.
Even though they are your oldest and only cards, they are draining you yearly, and probably monthly also, with the fees.

You should apply and be approved for new cards "before" you start closing those high fee cards. But as one poster mentioned, don't close the cards quickly (though waiting 3 years is a little extreme)

Try to allow your new cards to report for around 6 months before you start closing the high fee cards.
Then close one card (your highest fee card)
In another 4 to 6 months close the second high fee card.

You will take a score hit when you close them, but the sooner you take the hit, the sooner you will recover from it.

If you are planning any major purchases in the next 12 months or so (auto loan, mortgage, etc) you might wait until you have been approved before you close the cards.

Answer 5

If you have paid them off and they are clear and free, and you don't currently need the line of credit close them. ... Then apply for a couple 'legit' credit cards. If you have established some decent credit, you'll get a card. It might have higher interest rate than you'd like. But all you need to do in that case is keep a low balance and pay it off to zero every 3 months or so. THen, when you have paid on time and have good credit with them for 6 to 12 months, call them to ask them to lower the rate. If they do, that's great. If they don't, then cancel that card and apply for others that have a lower rate.

Answer 6

as far as credit cards go... keep them open if they do not have annual fees, this will show you have a batter credit to debt ratio and thus a higher credit score, allowing more credit opportunities and lowere interest rates. however if you are worried you may max them out again and run yourself under in debt, then you may want to close them. and since the ones you have sound like they do have anuual fees you should get rid of them and look into more decent cards such as americal express, capital one, or perhaps a visa/mastercard backed by your current bank with no anuual fee. you could use them once in a while (to eat out, or fill up your tank) and pay them off, doin this consistantly will show "cash flow" and will better your credit score and intise them to raise your credit limit. just resist the urge to go "all out" and spend money you dont have like so many people do (hence why credit card companies are doing so well these days)

Answer 7

Keep them because it looks good to lenders that you have money available that you don't spend. Alot of people may not know that the available credit you have is added to your annual income, which helps you during a loan.

My husband and I have 2 credit cards that we never use, yet the available credit combined is $10K. The interest rates are sky high so we just cut them up and let the banks see how well we are able to manage our finances!!!

Answer 8

Close them. Why would you continue to pay a fee for a credit score? Close them and let your credit score disappear then pay with cash.

Answer 9

If they are the only accounts you have, your credit history will disappear if you close them.

Answer 10

close