Greetings! I got some great advice a while back about not closing credit card accounts that are paid off and didn’t close them. What about accounts that have a yearly fee though? Is the impact on my credit score worth $75 a year?
Thanks!
It is true that closing a credit card could potentially hurt your credit score, however this is dependent on several factor.
First, if you carry a high balance on other cards and close down a card it could hurt your credit because your “credit usage” would go up and your debt to credit ratio would be worse.
Also, if you close an older card, this could potentially affect your “credit age” which could lower your score.
In your case, I don’t think the age of the account would be the problem, so I would say, if you don’t carry high balances on other cards, it shouldn’t affect your score terribly if you close one or two of the cards that are going to charge you.
Also, an alternative route that I have heard of some people taking is actually calling up the issuers of the card and seeing if you could potentially get the fee waived. In some cases, if you are a valued customer, they will waive the fee for a second year.
Hope this helps a bit. I also found this article by The Points Guy which goes into a little more detail.
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Moore Income posted:
It is true that closing a credit card could potentially hurt your credit score, however this is dependent on several factor.
First, if you carry a high balance on other cards and close down a card it could hurt your credit because your “credit usage” would go up and your debt to credit ratio would be worse.
Also, if you close an older card, this could potentially affect your “credit age” which could lower your score.
In your case, I don’t think the age of the account would be the problem, so I would say, if you don’t carry high balances on other cards, it shouldn’t affect your score terribly if you close one or two of the cards that are going to charge you.
Also, an alternative route that I have heard of some people taking is actually calling up the issuers of the card and seeing if you could potentially get the fee waived. In some cases, if you are a valued customer, they will waive the fee for a second year.
Hope this helps a bit. I also found this article by The Points Guy which goes into a little more detail.
GREAT ADVICE! I would be hesitant to keep a card with a yearly fee. My husband actually has one right now that’s $35 and he giggles at me because it bothers me so my plan is to pay off one of his other cards $2,500 balance and close that yearly fee card which has a balance of zero to hopefully offset the negative impact closing the one will cause.
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I do both Knitting and crocheting…I knit baby outfits, wash cloths and pot holders. I usually only sell like at my churches craft sales.
@freebiepharm that sounds like a good plan!
