Never close a credit card, it negatively impacts your credit, 3 reasons:
First- credit report doesn’t have an explanation area for you, oh I just didn’t want it anymore. A new creditor will see a closed card as something that was closed by the creditor not by you.
Second- credit is based on the length of time you have had “trade lines” open if you close the account you got when you were in college and now you are graduated and it’s 5 years later and you just don’t want it anymore the card from your bank now is much better. You just shortened your credited time from 60 months to 6 months you have lost all of your good time and payments.
Third- let’s say you have 3 cards with $5000.00 limits each just for ease of example. Let’s say you have one card with $5000.00 on it. If you decide to close one of the cards you aren’t using you are moving your credit limits from 33% to 50% of your revolving credit used most banks have a threshold of what they can or will borrow up to and it is below 50%.
I know that an “expert” has a show that will have you cut up your cards and never use them again or close them entirely. BAD ADVICE!!! It is much easier to have credit and never use it then to need it and have none and no back up plan or not enough in savings. Life happens, that is a fact! So here is what I recommend doing with credit cards you don’t use. Do you have a safety deposit box or a fire box at home will work. Put those cards in the box and lock it. Once every 4 months or so go get it out put a tank of gas on it and put it back. Pay it off then you have kept the card active the credit card company won’t close it for inactivity. Just don’t let it close.
Here is what I like to do, my wife gets paid not he 7th and the 22nd of every month. So my credit card bill is due on the 22nd, we put every automatic payment possible on the credit card, why? I know what day all of my electric, gas, car insurance, cell phone, Netflix, www.amazon.com subscriptions, all come out of the account on the same day. Conveniently on the 22nd I never miss a payment everything is paid on time then I make 1 payment to my credit card. If you are on time with your credit card and have no balance MOST of the time they will let you change your due date.
The credit cards your parents or friends have may not be the best card for you. You are not your parents, if your father is a partner at a law firm his credit card may not be what’s best for you. If your mother is a global traveler her miles card won’t be what’s best for you. On the other hand if your parents haven’t been wise with their credit you may have a better offer outstanding. You don’t have to take the first card offered to you. I did that because well “I’m an adult now and I have to have this card.” Horrible decision! I got so caught up in that was the first offer I had to take it.
What works for you? Are you going to carry a balance? Meaning will you be able to pay off this card every month. Never apply for a credit card as a something that is going to be be paid in full in a year. If you can’t pay it off in 3 months you are in too deep. I have seen several customers come into my office that have gotten tied up in 0% for 48 months or 0% for 36 months now they are in too deep they have a minimum payment of $500 or $700 a month. The furniture company is more than happy to let you pay it off in that time because they know that most people will get off track and you will end up paying a ton of interest on something? The interest is on pause so if you make your last payment late or if it were to be lost in the mail. All of that interest that you paused is now due. So that $600 tv is going to cost you more like $1100. It is what the company depends on 3 months if you can’t payoff the tv in 3 months you don’t need it. Same with the kitchen table. They will run another sale next week anyway. Same with a mattress sale they are “on sale” 28 day a month.
If you are in a situation where you want the rewards because you are finically in a good place ask yourself what do I want back? Cash, miles/points for travel? Points for anything I choose? I prefer cash back cards, because I can book my own fights and hotel instead of any sort of “blackout” dates I’ve seen the commercials too that say “we don’t have blackout dates” sure! My cash back won’t blackout either. Points systems are strange to me also? You only need 200,000 points to get this really nice pen… or I could just go buy a pen of $2.00 or 600,000 points for a cruise. Nah I want my cash every couple of months thanks.
*Warning* This will not make you rich, it is a benefit to the card and the extra money back is nice.