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Author: BWFoster78 Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308368  
Subject: Is closing oldest CC account a bad idea? Date: 1/9/2013 3:16 PM
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I like carrying two cards, one Visa and one MC. I use one as my primary and keep a recurring monthly payment on the backup one to make sure it doesn't go inactive. I never carry any balance, and all cards offer a reward. I choose the primary based on the best reward.

I recently got a new card with a better reward deal. I'd prefer to get rid of the older Visa instead of going through the inconvenience of dealing with 3 cards.

The problem is that the card I want to cancel is my oldest one. I don't want to cancel the MC b/c Sam's Club doesn't take Visa, and it's nice to have one of each for those kinds of situations.

I've had the MC for about 5 years and the original Visa for about 8. My credit is pretty good; I had no problem getting a home loan a couple of years back with good rates. I anticipate obtaining a loan for a car purchase in the next year. Each card carries roughly the same limit in the roughly 12 to 16k range.

Can I cancel the older card with impunity or will it impact my credit? If there is an anticipated impact, is it a big deal or not worth the inconvenience of keeping the extra card?

Thanks so much.

Brian
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Author: LaraAmber Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306684 of 308368
Subject: Re: Is closing oldest CC account a bad idea? Date: 1/9/2013 4:09 PM
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Well your cancelled card will stay on your record for a while, I think 7 years. So when it drops off: your oldest card will have a history of 12 years and your second oldest card (assuming you got a new one today) would have a history of 7 years. Those are both decent numbers. Plus you will have a mortgage on there and I assume not open a bunch of store cards the year the oldest card drops off.

I would be more worried about the credit limit offered by the new card. If the new card will only offer you a $5,000 credit limit your total usage ratio will likely increase. For example if you charge $3,000 a month (and pay it all off) and your total available credit across your credit cards is %24,000 then your utilization is 12.5%. But if your total available credit drops to $15,000 (1 $12k card & 1 $3k card) your credit utilization rises to 20%.

So you might want to call the new Visa company and ask them to match the credit limit of your old one. I've done that in the past with no problem. Drop our competitor's Visa and use us as your primary so we earn all those lovely merchant fees? Sure!

Lara Amber

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Author: BWFoster78 Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306698 of 308368
Subject: Re: Is closing oldest CC account a bad idea? Date: 1/10/2013 3:42 PM
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Lara,

That answered my question. I didn't understand about it staying on my record.

The new card limit is pretty close to the old card limit, and my usage rate is pretty low overall.

Thanks for your reply! I'll drop the extra card.

Brian

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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 306703 of 308368
Subject: Re: Is closing oldest CC account a bad idea? Date: 1/12/2013 9:33 AM
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Can I cancel the older card with impunity or will it impact my credit? If there is an anticipated impact, is it a big deal or not worth the inconvenience of keeping the extra card?

I would advise against cancelling the card, unless there is an annual fee. There are negative implications to closing an account, especially if it is your oldest card. While the card stays on your file for 7-10 years, the positive impact of the card on your credit history declines dramatically with it being inactive.

A better option, IMO, is to simply stop using the card, put it in a drawer or cut it up, and let it go stagnant. After a year or two, the issuer will likely cancel the account due to inactivity, but by then your other cards are 1-2 years older and the 7-10 year window won't begin until the card is closed.

If the card has any annual fee, then all bets are off and I would go ahead and close it now.

Acme

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