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So I got in this debate with my Mother-in-Law last week...
It started when I got the renewal notice for my AMEX card. I rarely use the card, perhaps once or twice a year, (if we book a hotel or rental car, I will reserve it on the card and just let the charge go through) but I pay it off immediately before I need to worry about interest, etc. I've carried their card off and on for about a decade and always managed to get around the annual fees. When I got the renewal notice, though, I began to wonder why I really needed it. Don't use it much, plus I have Visa Debit cards and a Kroger Mastercard that I use monthly to purchase groceries and earn points (then pay off). Besides, the AMEX has a $19k credit line and I dont see the sense of keeping that on my record. The Kroger card has a $7k line and I rarely take it above $1000 on a monthly basis before the lump sum payoff.
I opened the renewal notice and made a side comment that I would probably just close the card instead. My mother-in-law was visiting and she jumped in with the statement that we should NOT close the CC, but rather leave them out there until the card company closes them. She said her banker said closing unused CCs actually HURTS your credit score!
Not one to have my own logic over-ridden, we got into quite the discussion about it. In some cases, I can see why her banker would say it: if we carried a regular balance on one card - say for 20-50% of its line, and have another card that has a large line with no balance, then the large card is working to reduce the debt ratio and help the credit score, or at least our credit rating. However, in my case, where I dont typically carry a balance at all (knock on wood) and always pay my bills on time, I dont see the sense of having the extra credit exposure on my record.
Am I missing something? I'd appreciate it if someone who is an expert on this kind of thing, could let me know their thoughts. Thanks
It started when I got the renewal notice for my AMEX card. I rarely use the card, perhaps once or twice a year, (if we book a hotel or rental car, I will reserve it on the card and just let the charge go through) but I pay it off immediately before I need to worry about interest, etc. I've carried their card off and on for about a decade and always managed to get around the annual fees. When I got the renewal notice, though, I began to wonder why I really needed it. Don't use it much, plus I have Visa Debit cards and a Kroger Mastercard that I use monthly to purchase groceries and earn points (then pay off). Besides, the AMEX has a $19k credit line and I dont see the sense of keeping that on my record. The Kroger card has a $7k line and I rarely take it above $1000 on a monthly basis before the lump sum payoff.
I opened the renewal notice and made a side comment that I would probably just close the card instead. My mother-in-law was visiting and she jumped in with the statement that we should NOT close the CC, but rather leave them out there until the card company closes them. She said her banker said closing unused CCs actually HURTS your credit score!
Not one to have my own logic over-ridden, we got into quite the discussion about it. In some cases, I can see why her banker would say it: if we carried a regular balance on one card - say for 20-50% of its line, and have another card that has a large line with no balance, then the large card is working to reduce the debt ratio and help the credit score, or at least our credit rating. However, in my case, where I dont typically carry a balance at all (knock on wood) and always pay my bills on time, I dont see the sense of having the extra credit exposure on my record.
Am I missing something? I'd appreciate it if someone who is an expert on this kind of thing, could let me know their thoughts. Thanks
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