The Penny Hoarder's Sr. Editor, Robin Hartill (AKA Dear Penny), hosted a LIVE Q&A from January 13th - January 17th.  During that week she answered member questions about credit card debt.  Take a read through the topics below for great conversations and tips to help you navigate the world of credit card debt! 

Dear Penny and  Community,

After bankruptcy in 2008 I needed to restart my credit. My score is now good (over 710). Problem: To improve my score I opened a credit card secured by a low rate CD. The card has an annual fee. I wish to close the card (before the annual renewal) which will automatically end the CD. I have another card which accrues miles (I have no use for future travel). Can I also close this card? If not now, when? I do not know how many cards is too many? Any suggestions.....

Original Post

Your overall credit limits matter more than the actual number of cards you have. You want to have enough open credit that you can keep your credit utilization ratio (the percentage of credit you're using) below 30%. There are some people who successfully juggle dozens of credit cards as they play the miles-and-points game. But it doesn't sound like you're interested in being one of those people, which is fine — neither am I!

So provided you have enough open credit to keep your credit usage low, the question is: How many cards feels like too many cards to keep track of?

Keep in mind that when you close credit card accounts, your score usually takes a bit of a hit, especially when you close older accounts. But usually, this drop is temporary — so it's usually worthwhile if you want to get rid of a high annual fee or get your money back from a secured card deposit.

You will experience a credit score drop because of the loss of open credit lines and the age of accounts and number of types of accounts. I closed 4 of the secured type cards because I did not need to pay those monthly fees anymore and could obtain credit normally and my score dove over 100 points and now I am not able to secure regular credit again. I have had to restart opening more secured accounts to bring my score up slowly. I have started with the SELF loan which is a CD for 2 years that you make monthly payments on. I have rebounded  30 points in just 2 months so far.

And always pay off the secured card in full before closing or they will ding you for a closed account, too.


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James S Osaki