Should I cancel my first credit card or not?

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vincemort
 
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Should I cancel my first credit card or not?

Postby vincemort » Thu Jan 26, 2012 3:10 pm

Hey everyone. I'm 23 years old and have been building my credit for about two and a half years. I'm pleased to announce my credit score is above 750 but I need some advice from you credit veterans.

I read online that one way to build and maintain credit is to keep your oldest credit card account open forever because it shows reliability and a long history. Unfortunately, my first credit card is not a very good one. Although I pay the balance down every month (making interest irrelevant), I am charged about a $50 annual fee. As mentioned, my credit is quite good now and I could easily get a much better card with a lower interest rate, no annual fee, and cash back options.

My question is this: Is it more important to keep the account open or stop the $50 annual fee by cancelling out my first credit card account? Exactly how will this decision affect my credit score by closing out my old account and signing up for a better card?

Thank you. :)


IJedi
 
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Postby IJedi » Fri Jan 27, 2012 10:58 pm

Hello,

From what I understand about credit history, you don't want to cancel your old credit card and here is why.

While the credit card may have bad history on it, it is still history nevertheless. By getting rid of it, you are getting rid of how far back your history goes. While having that bad information may seem like a bad thing, it affects your overall credit score less and less as time goes on, and will inevitably drop off from your history altogether within a few years.

History is still history, even if it is bad. Whatever negative impact your old credit card has done to you has already affected your credit as bad as it could. Cancelling now would only serve to probably lower your credit score by a good chunk. In other words, don't cancel, let it take care of itself with time.

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PlatinumAMEX94
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Postby PlatinumAMEX94 » Sat Jan 28, 2012 3:27 pm

vincemort wrote:Hey everyone. I'm 23 years old and have been building my credit for about two and a half years. I'm pleased to announce my credit score is above 750 but I need some advice from you credit veterans.

I read online that one way to build and maintain credit is to keep your oldest credit card account open forever because it shows reliability and a long history. Unfortunately, my first credit card is not a very good one. Although I pay the balance down every month (making interest irrelevant), I am charged about a $50 annual fee. As mentioned, my credit is quite good now and I could easily get a much better card with a lower interest rate, no annual fee, and cash back options.

My question is this: Is it more important to keep the account open or stop the $50 annual fee by cancelling out my first credit card account? Exactly how will this decision affect my credit score by closing out my old account and signing up for a better card?

Thank you. :)


Call your bank and tell them you are tired of paying an annual fee, your credit score is over 750 and you are considering canceling. Ask them to convert your card to a no fee card.
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Postby fantasy86dj » Tue Jan 31, 2012 3:52 am

Nooooo do not cancel, your credit score will be affected, find a cheaper or fee free product instead.

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Postby mistatall » Tue Jan 31, 2012 5:52 pm

The replies thus far aren't very helpful.

lJedi - He doesn't have bad credit history on the card.
Fantasy86 - Do not cancel? He doesn't want to pay $50 per year so if he finds another fee free card he is still paying $50 per year. Do you mean you want him to upgrade or something out of a card that has a fee?
Platinum - CC companies really go for this?

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Postby Money card » Tue Jan 31, 2012 9:58 pm

my first credit card had an annual fee of 15 dollars it was the year 1989, the card I had was a first fidelity visa. when I got pre approved offers for gold cards I canceled my card just around the time of the annual fee I think it was 1994.

but back in those days cards had annual fees, chase was 25, citibank was 20, First fidelity was 15.

since the card has a 50 annual fee It would be a good idea to cancel. what I WOULD NOT DO IS CANCEL 4 cards at a time. to cancel 1 card is fine, I have canceled about 4 cards in my life time.

first of all is this an airline or hotel card? do you use this card for business or personal use? does your company want you to use this card? or is this a introductory card low credit limits high annual fee? is this orchard visa?

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Postby sticf » Wed Feb 01, 2012 7:53 am

vincemort wrote: Is it more important to keep the account open or stop the $50 annual fee by cancelling out my first credit card account?


Shutting down a card that you do not need and is costing you $50 a year is a no-brainer. Your credit history is only a few years old. Find a nice no fee card to open (if you do not have one) and let that be your "long term stability". People that get wrapped up in "OMG I dropped a few points on my Credit Score" are just a bit over the edge.

Credit is a long long long game. It is a game you will be playing for the rest of your life. Paying every year for the privileged of not using a card is not a smart financial move. In 20 years this 2.5 year period will be a non-starter when you look at account history.

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Postby PlatinumAMEX94 » Wed Feb 01, 2012 1:13 pm

mistatall wrote:The replies thus far aren't very helpful.

lJedi - He doesn't have bad credit history on the card.
Fantasy86 - Do not cancel? He doesn't want to pay $50 per year so if he finds another fee free card he is still paying $50 per year. Do you mean you want him to upgrade or something out of a card that has a fee?
Platinum - CC companies really go for this?


mistall, Yes, they do this. This isn't for everyone though. If you have a track record of bad credit, then the answer is no. But if you show you're responsible, like auto insurance carriers, they will move you to the "better rates" group. It also depends on the issuing bank as well. Captial One, not so great to work with.
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Postby odin673 » Sat Feb 04, 2012 10:57 am

Drop the card. The card will stay on your credit report for a while anyways. I don't think it's as big of a hit as people make it out to be. Unless you plan to buy something on credit very soon, I don't see why you would keep the card.

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Postby Celestine » Mon Feb 06, 2012 11:58 pm

I'm assuming that the first credit card you have with $50.00 annual fee is one of those cards that rebuilds bad credit.

Keep it just in case something happens to your credit and will need some rebuilding.

I honestly think a 750 credit score just the average and not good enough. But that is just me since I set higher standards than other do.
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