My husband and I have been debating whether or not to close two old credit cards we both have. Normally, this wouldn’t be a dilemma. In general, closing old credit cards is a bad idea, for two reasons:
- Part of your credit score is calculated based on how long you’ve had credit. So, if it’s your oldest card (as these are for us), canceling them will shorten the amount of time you’ve had credit available, thus lowering your score.
- Your total available credit limit also affects your score. In canceling a card, you get rid of that credit limit, thus lowering your overall line or “allowance”.
Now, you’re probably thinking, “Why would you want to close those cards then?” Well, because those cards also happen to have annual fees. The cards used to be highly useful to us, despite the annual fee. They are airline mileage cards, so for every dollar we spent, we’d get miles in return. However, this particular airline is no longer our preferred airline (I have “status” on another), so we rarely fly it anymore. That makes earning miles a little useless… and the annual fee no longer worth the trouble.
I think my first step is actually going to be seeing if I can’t get rid of the annual fee. Sometimes, whether you’re looking to do this or lower your interest rate or get a late fee penalty removed, just calling the credit card company and asking for what you want can actually work.
We’ll see. If I can’t get it removed, then I’ll really have to weigh the pros and cons of keeping these cards further.