Closing store card accounts vs regular cards

Where you can talk about store credit cards, like gas station cards, department store cards, etc.
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JonE
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Closing store card accounts vs regular cards

Postby JonE » Mon Dec 21, 2015 3:19 pm

I've always wondered what affect closing a store card account would have on your credit as opposed to a regular bank card account. Would a store card be considered 'subprime' like a Credit One account? (for the record, when I closed Credit One my scores went UP!)

I'll likely be doing the same at some point with Walmart and CareCredit (but will keep Amazon around).
Current Cards: Chase Freedom, Discover IT
Future: TBD


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CarefulBuilder14
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Re: Closing store card accounts vs regular cards

Postby CarefulBuilder14 » Tue Dec 22, 2015 1:15 am

JonE wrote:I've always wondered what affect closing a store card account would have on your credit as opposed to a regular bank card account. Would a store card be considered 'subprime' like a Credit One account? (for the record, when I closed Credit One my scores went UP!)

I'll likely be doing the same at some point with Walmart and CareCredit (but will keep Amazon around).

I don't think all store cards are subprime. I wouldn't say a $30k Lowe's card is the pinnacle of creditworthiness, but I certainly wouldn't group it in with a $500 Walmart card.

What's with wanting EDP and Double Cash? Do a lot of places you shop not take Amex? EDP generally should make Double Cash unappealing, since 1.5 MRs should beat 2% cash. Or it's an either/or wish list?
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

kdm31091
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Re: Closing store card accounts vs regular cards

Postby kdm31091 » Tue Dec 22, 2015 9:27 am

On manual review, underwriters don't want to see a bunch of store cards. The store card junkies defend it as "util padding" but everything comes with a price. Your utilization is padded yes, but you also have 20 tiny limit useless accounts on your report that are revolving and represent a certain risk factor. Although many people believe there's no downside to as many open accounts as you can handle, I don't subscribe to that 100%. Yes, open, unused credit helps you but once you get past a certain point, your risk level increases because of the potential debt load you could rack up.

Anyway, you aren't in the camp of a bunch of store cards, OP. With your couple of cards I would suspect to see little to no score harm in closing them and if anything, it could help you on a manual review (underwriters tend to prefer "regular" accounts and/or weight them more heavily as a measure of responsibility). For what it's worth, I have pretty much always just closed accounts whenever I wanted, and my score never has gone down because of closing an account. A few times it actually went up a bit (maybe due to less risk - I don't know).

JonE
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Re: Closing store card accounts vs regular cards

Postby JonE » Tue Dec 22, 2015 11:34 am

CarefulBuilder14 wrote:
JonE wrote:I've always wondered what affect closing a store card account would have on your credit as opposed to a regular bank card account. Would a store card be considered 'subprime' like a Credit One account? (for the record, when I closed Credit One my scores went UP!)

I'll likely be doing the same at some point with Walmart and CareCredit (but will keep Amazon around).

I don't think all store cards are subprime. I wouldn't say a $30k Lowe's card is the pinnacle of creditworthiness, but I certainly wouldn't group it in with a $500 Walmart card.

What's with wanting EDP and Double Cash? Do a lot of places you shop not take Amex? EDP generally should make Double Cash unappealing, since 1.5 MRs should beat 2% cash. Or it's an either/or wish list?


Double Cash is on the maybe list. But yeah, EDP should make that less appealing.

My Walmart card is $400 and just. will. not. get past that point. I've had it for over a year, it might be worth it to cut my losses and move on. Discover is the better deal with Walmart online and the Double Cash Back/Discover Deals combo anyway.
Current Cards: Chase Freedom, Discover IT
Future: TBD

JonE
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Re: Closing store card accounts vs regular cards

Postby JonE » Tue Dec 22, 2015 11:36 am

kdm31091 wrote:On manual review, underwriters don't want to see a bunch of store cards. The store card junkies defend it as "util padding" but everything comes with a price. Your utilization is padded yes, but you also have 20 tiny limit useless accounts on your report that are revolving and represent a certain risk factor. Although many people believe there's no downside to as many open accounts as you can handle, I don't subscribe to that 100%. Yes, open, unused credit helps you but once you get past a certain point, your risk level increases because of the potential debt load you could rack up.

Anyway, you aren't in the camp of a bunch of store cards, OP. With your couple of cards I would suspect to see little to no score harm in closing them and if anything, it could help you on a manual review (underwriters tend to prefer "regular" accounts and/or weight them more heavily as a measure of responsibility). For what it's worth, I have pretty much always just closed accounts whenever I wanted, and my score never has gone down because of closing an account. A few times it actually went up a bit (maybe due to less risk - I don't know).


That's pretty much my thinking, and I'm not a believer in 'util padding', to me that's just a front for wanting to apply for more cards for no reason.

The ironic part is using credit has made me appreciate having cash around for some stuff. It's probably not prudent for me to put anything and everything on credit cards. Mainly use it for bills (which is plenty by itself), groceries, gas and restaurants. Using a credit card to pay $1.50 for a soda out of the machine is pushing it slightly.
Current Cards: Chase Freedom, Discover IT
Future: TBD

kdm31091
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Re: Closing store card accounts vs regular cards

Postby kdm31091 » Tue Dec 22, 2015 11:47 am

JonE wrote:
kdm31091 wrote:On manual review, underwriters don't want to see a bunch of store cards. The store card junkies defend it as "util padding" but everything comes with a price. Your utilization is padded yes, but you also have 20 tiny limit useless accounts on your report that are revolving and represent a certain risk factor. Although many people believe there's no downside to as many open accounts as you can handle, I don't subscribe to that 100%. Yes, open, unused credit helps you but once you get past a certain point, your risk level increases because of the potential debt load you could rack up.

Anyway, you aren't in the camp of a bunch of store cards, OP. With your couple of cards I would suspect to see little to no score harm in closing them and if anything, it could help you on a manual review (underwriters tend to prefer "regular" accounts and/or weight them more heavily as a measure of responsibility). For what it's worth, I have pretty much always just closed accounts whenever I wanted, and my score never has gone down because of closing an account. A few times it actually went up a bit (maybe due to less risk - I don't know).


That's pretty much my thinking, and I'm not a believer in 'util padding', to me that's just a front for wanting to apply for more cards for no reason.

The ironic part is using credit has made me appreciate having cash around for some stuff. It's probably not prudent for me to put anything and everything on credit cards. Mainly use it for bills (which is plenty by itself), groceries, gas and restaurants. Using a credit card to pay $1.50 for a soda out of the machine is pushing it slightly.



While some will disagree in the pursuit of every single penny in rewards they can get, I actually see your point. There have also been many studies done that basically amount to "consumers spend more on their credit cards than they would with cash". So using it for every single purchase to earn 1-2% just tempts people to spend far more than an extra 1-2%. It's the same thing as opening cards for small extra benefits; an extra 1% here and there...it doesn't take much to increase your spending by more than that and pretty much wipe out the benefit.

None of this is absolute or applies to everyone, but yeah, it definitely pays to be careful with spending no matter what.

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CarefulBuilder14
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Re: Closing store card accounts vs regular cards

Postby CarefulBuilder14 » Tue Dec 22, 2015 12:30 pm

JonE wrote:The ironic part is using credit has made me appreciate having cash around for some stuff. It's probably not prudent for me to put anything and everything on credit cards. Mainly use it for bills (which is plenty by itself), groceries, gas and restaurants. Using a credit card to pay $1.50 for a soda out of the machine is pushing it slightly.

That's EDP blasphemy! :ppp

In practice, I have seen vending machines that charge more for credit transactions, so cash might be more practical.

Though, if I were to use a CC at a vending machine, I have to wonder if the transaction would count as "dining" for CSP or PRG...
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

JonE
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Re: Closing store card accounts vs regular cards

Postby JonE » Tue Dec 22, 2015 1:14 pm

CarefulBuilder14 wrote:
JonE wrote:The ironic part is using credit has made me appreciate having cash around for some stuff. It's probably not prudent for me to put anything and everything on credit cards. Mainly use it for bills (which is plenty by itself), groceries, gas and restaurants. Using a credit card to pay $1.50 for a soda out of the machine is pushing it slightly.

That's EDP blasphemy! :ppp .


Well, maybe when I get that card. :D
Current Cards: Chase Freedom, Discover IT
Future: TBD

Brad Bishop
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Re: Closing store card accounts vs regular cards

Postby Brad Bishop » Wed Jan 20, 2016 3:55 pm

I'm with the others. I wouldn't be overly concerned about closing a card.

What you're really going for is:
- Pay your bills on time.
- Keep your debt low (pay it off ASAP)
- Don't go nuts on the credit cards either with spending or acquiring a ton of credit.

It's not rocket science. You just want to show a history that you're not a dolt (I was one at one time and thankfully those years are well behind me).

With regards to store cards:

If you're just starting out then maybe they help you. After your first Visa or MasterCard, I'd just go the normal bank card route unless there is some large benefit to having a store card. If Target, for example, gives you 5% off on every purchase when you use their card then get their card, use it, and pay it off each month. If they offer 1-2% then just get a regular bank card which pays 1-2%.

I wouldn't have a card that locked me into a particular product. For example, I have a Chase Disney Visa. I only have it because they offer discounts when you use it at their parks. I don't use it day-to-day because 1% back in Disney Dollars seems stupid to me. I can get 1-5% back (depending on the month - Discover) using something else and those are US dollars which I can then use anywhere.. Even at Disney!

kdm31091
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Re: Closing store card accounts vs regular cards

Postby kdm31091 » Sat Jan 23, 2016 4:21 pm

Brad Bishop wrote:I'm with the others. I wouldn't be overly concerned about closing a card.

What you're really going for is:
- Pay your bills on time.
- Keep your debt low (pay it off ASAP)
- Don't go nuts on the credit cards either with spending or acquiring a ton of credit.

It's not rocket science. You just want to show a history that you're not a dolt (I was one at one time and thankfully those years are well behind me).

With regards to store cards:

If you're just starting out then maybe they help you. After your first Visa or MasterCard, I'd just go the normal bank card route unless there is some large benefit to having a store card. If Target, for example, gives you 5% off on every purchase when you use their card then get their card, use it, and pay it off each month. If they offer 1-2% then just get a regular bank card which pays 1-2%.

I wouldn't have a card that locked me into a particular product. For example, I have a Chase Disney Visa. I only have it because they offer discounts when you use it at their parks. I don't use it day-to-day because 1% back in Disney Dollars seems stupid to me. I can get 1-5% back (depending on the month - Discover) using something else and those are US dollars which I can then use anywhere.. Even at Disney!



I think the main thing about the Disney card that's convenient is that you get the reward dollars on a Disney gift card and take it as spending money in the parks/resort/etc. While you can use cash back from Discover anywhere, you can't directly redeem a Disney gift card. You could of course buy one and then erase the purchase with a statement credit though.

I don't have a Disney card, but my grandmother does. I see the appeal for certain situations. It is not the best reward product out there by far, but I see the value in it. I do agree though one has to be careful locking in to a certain thing. In this case, it only makes sense if you're a serious Disney fan and know you'll either go to the parks or buy things from them.



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