Should I cancel my credit card?

[brecken]

This is my first post although I have been lurking around the forms for a couple of years now.

I've had a lot of credit card debt in the past, but I have paid it down over the last five years. I'm now in a position where I don't have credit card debt anymore which is a huge relief, but now I have four different credit cards. The question is whether or not I should cancel my credit cards?

I've heard that if you cancel credit cards they can lower your credit score. On the other hand, even though I paid them all off, I'm not confident that I won't use them again at some point in time in the future. What I'd like to do is cancel them all so I don't have been tempting me all the time, but I don't want to do this if it's going to ruin my credit because I'd like to buy a house in the next couple years.

Is there a solution to this problem? Should I cancel my credit cards and just take that hit, or is there something else I can do? All opinions welcome.

[disneysteve]

How about just cutting up/shredding the cards? Forget they exist. But leave the accounts open so that it doesn't impact your FICO.

One exception would be any card for which you are paying an annual fee. No reason to keep paying for something you aren't using.

Ideally, the card to keep is the one you've had the longest if you are going to cancel others.

[snafu]

brecken, Welcome to SA, hope you'll help others by explaining your experiences getting out of debt. Good on you for paying off all CC balances. Closing CCs will not only lower your FICo score but likely impact future mortgage interest rates. I suggest removing your oldest, no fee CC from your wallet and storing it in the freezer. If you find remaining CCs too tempting, shred them. The physical cards can be re-ordered sometime in the future should you wish.

[ua_guy]

Welcome!

Disneysteve's advice is good (as usual). Cut up the cards, and close the accounts on the cards that bear annual fees.

FYI--the cardholders may cancel the accounts due to inactivity after a year or so anyway.

I would not advise using "credit" as a bolster for your emergency savings fund, but it's better to have credit and not need it, on the chance that one day you might really need it. I see no reason to flat out cancel your accounts.

[Weird Tolkienish Figure]

This is my first post although I have been lurking around the forms for a couple of years now.

I've had a lot of credit card debt in the past, but I have paid it down over the last five years. I'm now in a position where I don't have credit card debt anymore which is a huge relief, but now I have four different credit cards. The question is whether or not I should cancel my credit cards?

I've heard that if you cancel credit cards they can lower your credit score. On the other hand, even though I paid them all off, I'm not confident that I won't use them again at some point in time in the future. What I'd like to do is cancel them all so I don't have been tempting me all the time, but I don't want to do this if it's going to ruin my credit because I'd like to buy a house in the next couple years.

Is there a solution to this problem? Should I cancel my credit cards and just take that hit, or is there something else I can do? All opinions welcome.

Don't close them. If the bank wants to close due to inactivity that's fine. Just don't do it yourself, it hurts your credit score.

[normajean]

It also hurts your score to pay off credit cards at the end of the month. Yet I do it because it's right for me.

[corn18]

It also hurts your score to pay off credit cards at the end of the month. Yet I do it because it's right for me.

I don't understand your statement. Please explain how paying off a credit card at the end of the month hurts your credit score.

Tom

[Petunia 100]

It also hurts your score to pay off credit cards at the end of the month. Yet I do it because it's right for me.

This is a myth. Paying your cards in full does not hurt your score at all.

[bjl584]

It also hurts your score to pay off credit cards at the end of the month. Yet I do it because it's right for me.

That is totally wrong.

[Patrick_OG]

Open credit lines that are not being used hurt your credit score. Try to find a low interest credit card and transfer balances from the others that have higher interest onto a single card, then close the other accounts. If you have unused credit cards around that have a zero balance and that you don't use close them.

[HappySaver]

I would keep 2, or most 3, credit cards open, the ones with the highest limit and the best perks. 4 is too many - after a certain point you do start to get dinged for having too many lines open. After closing 1 or 2 lines (and if any of the cards are store cards close them first), keep using the other cards for basic monthly expenses like groceries and gas and make sure to pay off the balance in full each month. This will
- ensure that your credit lines stay in place
- demonstrate that you know how to use credit responsibly
- instill good habits and get you used to using your cards as a tool that helps you

Many of us on this board who use cards this way and pay off the balances each month have reported FICO scores around 800. It's important to have credit and to use it correctly in order to have excellent credit scores.

[moneysma]

I have a few open accounts, but I only use 2 cards. The ones I don't use I just place in my safe an forget about them. The other 2 that I do use, I make sure to just pay the balance in full each month. My credit score is roughly 800.

I see no harm in keeping the cards open, just put them away/destroy them so that you aren't tempted.

[snidersusan21]

Your credit score could be affected by closing a credit card if:

* the card still has a balance
* it still has available credit when your other cards don't
* it was the first card you ever opened (though this won't matter for about 10 years).
* You don't have any other credit cards.

[youshallliveinoverflow]

Congratulations on paying off your credit card debt. I know the feeling and it feels awesome not to owe credit card debts. Be very careful closing old credit cards. I personally had a credit card with Macy's for over 15 years, I closed the credit card because I no longer used the card and my credit score drop almost 100 points. The reason why, I no longer received points for the seasoned debt. Luckily, Macy's allowed me to reopen the same card. Thus, restoring my credit score. I would simply cut up the credit cards and not use them. Please do not close your credit cards, it may ruin your credit score.

[molly1]

I have only two credit cards and I am using both of them. So don’t have exact idea about it but as per my opinion you have to cancel that credit card, which you are not using. It will be helpful to you for saving money also.