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Author: galagan Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Closing unused credit cards Date: 8/25/2005 4:32 PM
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Greetings everyone. This is a good forum even though I've never had occasion to use it before.

I just pulled my annual credit report and noticed that I have a bunch of open credit card accounts that I never use. I've got 8 cards with a total credit limit of about 1.5 times my annual salary, which seems absolutely ridiculous to me. I mostly use one card issued by my bank employer, and occasionally use a second card that has a 1 percent cash rebate. My balance rarely goes over $1,000 and I pay it off each month.

The only exception to this is that several of these cards offered 0 percent deals in the past. The card companies would offer to advance me money with no transaction fee and 0 percent for six months or so. I took advantage of this, taking the money and putting it in a money market account for essentially free interest. For that period, I would pay the minimum in order to maximize the amount of money I could keep and earn interest on.

Looking on sources that this board refers to, some seem to think there might be negative consequences to my cancelling some of these accounts. I don't really have to worry about a debt to available credit ratio, but some of these inactive cards are older cards and I would lose some amount of credit history by closing them. I also wonder if closing several accounts at the same time would raise flags, or if I should close one a month.

Also, is it a bad idea to take advantage of these 0 percent deals? I notice that my credit report notes the highest amount of credit used - does this amount have any impact on credit scoring?

I'll note in passing that the secrecy and vagueness of information about credit scoring is annoying. Thanks for any insights you have!

dan
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