This post originally appeared June 21, 2018 on CreditCards.com as “Credit scoring effect of opening vs. closing credit cards”

By Barry Paperno

Dear Speaking of Credit,
My Chase Slate card has a long credit history. But it is barely used because it does not have rewards or points. However, the Amazon Prime Rewards card (which I do not have) has perks that I can actually benefit from.

Closing a credit card with long history will jeopardize my credit score. And, I really do not want to apply for another credit card.

If I can apply for the new card and keep my long credit history, but NOT affect my credit score negatively, that would be ideal. Any advice? – Geno

Dear Geno,
It would be ideal to be able to open a new card, keep your old card’s history and do no harm to your credit score, which is easy to achieve.

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This post originally appeared June 7, 2018 on CreditCards.com as “Will closing card with a remaining balance hurt my credit?”

By Barry Paperno

Dear Speaking of Credit,
Chase has notified me that they are raising the interest on my card because, in the words of Chase, my “APRs are below the lowest APRs we currently offer on similar accounts.”

I have the right to reject the changes by next Wednesday. If I do, they say they will close the account and I can continue to make payments until the balance is paid off at the old APR.

My question is, will that hurt my credit? – Lynn

Dear Lynn,
By now, it has become pretty clear to credit score enthusiasts that closing a credit card can lower a score.

What’s not always so clear is when to worry and when not to worry if that will be your experience the next time you close a card.

Let’s start by separating some fact from fiction about scores and closing accounts with a good understanding of some credit scoring forces typically at work when you close a credit card.

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This post originally appeared July 13, 2017 on CreditCards.com as “‘Q&A: Closing maxed-out card won’t lower credit utilization”

By Barry Paperno

Dear Speaking of Credit,
I have three credit card accounts with a total credit of $23,000. One account is paid off monthly, the other two are maxed out. Total credit debt is $10,800 between those two. Would it help my utilization ratio if I close one of those maxed-out accounts? – Millie

Dear Millie,
There are some good reasons for closing a credit card. Ending an annual fee and minimizing the chance of fraudulent use are just a couple. Yet, contrary to popular belief, helping your credit score is not a good reason to close a card.

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This post originally appeared June 1, 2017 on CreditCards.com as “‘How will closing secured card, opening unsecured card affect credit?”

By Barry Paperno

Dear Speaking of Credit,
I have a CD at USAA for $500, which secures my USAA American Express card for a $500 limit.

My FICO score is now where I can qualify for an unsecured card, but USAA will not convert my AmEx to an unsecured card. They insist I have to close the AmEx and open a new unsecured AmEx.

Will that affect my credit score? Will I lose all of the good credit history? – Jerry

Dear Jerry,
Great job of using that secured card to help rebuild your credit! Now that your score qualifies you for an unsecured card, it’s smart to be concerned about any possible credit scoring effects from closing the secured card and opening a new unsecured one.

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This post originally appeared April 27, 2017 on CreditCards.com as “‘Will paying down closed card debt help my credit score?”

By Barry Paperno

Dear Speaking of Credit,
I went through some tough times and wasn’t paying on the credit card I have through my bank. The bank ended up closing the credit card account. I have been making payments on the “closed card” for about six months now. Is this helping my credit score in any way? Or is it making my score worse because I have a “closed” account?

No matter what I do I can’t seem to get my score above 640. I have another credit card I make regular payments on, and I have a personal loan through my bank that is on automatic pay each month. My husband and I want to buy a vehicle and a house within the next couple of years, but I would like my score to be above 700. How do I get there? – Aislynn

Dear Aislynn,
Let’s take a good look at how that closed card might be impacting your credit score now that you’ve been paying on time over the past six months, and what the future may hold.

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This post originally appeared October 6, 2016 on CreditCards.com as “Don’t close your credit card accounts to win a mortgage”

By Barry Paperno

Dear Speaking of Credit,
I have excellent credit and the four credit cards keep raising my credit limits, which is hurting me when I go to apply for a home loan because they consider the amount that is available something that can be used. What can I do to close two of them and limit the amount of the other two without hurting my credit score? – Barbara

Dear Barbara,
My first reaction to your question is to recommend finding another mortgage company. Closing cards and lowering limits should not be a requirement for loan approval. Research has shown that reducing the amount of available credit, whether by closing cards or lowering limits, does not by itself reduce the risk of future missed mortgage payments. Unfortunately, some lenders seem to have missed that memo.

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This post originally appeared April 21, 2016 on CreditCards.com as “Card account isn’t closed if annual fee still charged”

By Barry Paperno

Dear Speaking of Credit,
I have a credit card that expired four years back. I have not renewed it, but I have a balance which I still paid until now. But every year the company charged me an annual fee, even if I am not using the card anymore, and it’s been expired for years because I am residing now in a different country. I have complained to the company asking why I was continuously charged even if I am not using their services anymore. Is this legal for them to charge me? – Eva

Dear Eva,
Despite your card having expired four years ago, the fact that you’re continuing to be charged annual fees tells me the card company still considers that card to be open in at least one respect – charging that annual fee. I’ll leave your question of its legality to the legal experts, though, legal or not, most of the major credit card lenders do not charge an annual fee once a card has been closed, regardless of the remaining balance amount.

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This post originally appeared March 31, 2016 on CreditCards.com as “Pay off revolving card debt first over installment loan”

By Barry Paperno

Dear Speaking of Credit,
I am paying off my debt and have a credit card and installment loan open, both with about the same balance. The installment loan has a high interest rate, much higher than the credit card. In terms of helping my credit score and avoiding interest combined, which balance would you suggest I pay off first? – Bill

Dear Bill,
As I see it, the conundrum you face in your attempt to both lower your interest expense and help your score by initially paying off one of your two balances is that the higher-interest loan you want to pay off first is the debt having the least impact on your credit score.

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This post originally appeared February 25, 2016 on CreditCards.com as “Credit utilization rules for managing your credit score”

By Barry Paperno

Dear Speaking of Credit,
Good morning, My credit score is 739 and I have a total of 12 credit cards in my history; however, I only use four cards out of the 12. I just want to know if it will hurt my credit if I leave the cards that I don’t use open with a $0 balance or should I close them? Also, my average age of credit history is poor. How can I improve my status and how long do you advise I should wait just in case I would like to open another card or finance a car or house? — Jennifer

Dear Jennifer,
As you’ll see, one benefit that goes along with good credit — which is what you have with a 739 score — is that you have more freedom to open and close cards without the harm that can befall someone with a lower score. And while it’s hard to find many facts about credit scoring that are true for everyone, regardless of their score, there are at least a couple I’ll apply here:

• Leaving cards with $0 balances open will never hurt your score.
• Closing cards, with or without a balance, will never help your score.

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This post originally appeared August 27, 2015 on CreditCards.com as “Credit card advice for a ‘debit card kind of guy’“

By Barry Paperno

Dear Speaking of Credit,
Hello, I am in a dilemma, and constantly get different advice. Here is the scoop. I have four open bank credit cards, three with Chase, one with American Express. Of those, I just now started to use the American Express, and one of the Chase ones. The other two are dormant for a couple years. They both have a low credit limit. I was always a debit card kind of guy, since I found spending money I have is easier to manage than spending money I don’t have.

In addition to these cards, I have four cards from department stores. I got them when I was younger, since opening a credit line got me a discount on the purchases (pretty stupid, I know). But with large purchases it made sense.

Now I have a total of eight cards. I was thinking of closing all the department stores ones. They all, however, have a high credit limit. I was told that closing those cards will damage my credit score significantly. Please let me know what I should do. I would like to downsize to only two, maybe three cards, but closing five would probably damage my score. I don’t have any debt, besides for my student loan, and I just finished paying off my car a couple months ago. Any advice will help, and thank you in advance. — Jacob

Dear Jacob,
As your comments suggest, there seems to be no shortage of conflicting information out there about how many cards you should have, whether you should close some of your cards if you have “too many,” and whether closing cards will help or hurt your score. As such, I don’t blame you for being a “debit card kind of guy,” though now, for some reason, you appear to be headed back to also being a “credit card kind of guy.”

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