Chosen by Asker

Unless they charge annual fees, you should keep both cards. Just pay down what you owe, but keep both cards for emergency purposes. It helps to buy groceries or small items on the card and pay it off each month. If you do cancel a card, it makes more sense to keep the card you have had the longest. (The length of time you have had a card is factored into your credit score.) If the reason you want to cancel that card is because the interest rate is higher, just call them and tell them you are calling to cancel the card unless they can give you a better interest rate. Negotiate with them until they give you a better rate. If they don't give you the rate you want, then cancel the card.

by susanmaried

5 months ago

Asker's Rating: 

no! if your second credit card is active and is in use.I say it from my personal experience.I believe you cannot pay what you owe at the time of cancelling credit card but you have to pay what Bank demands and even if you contest same with your banker the will be no adverse effects on your second credit card.Make sure you make repayments on time(for second card)

by lawyer- 5 months ago

Yes, but not much.

by Reggie- 5 months ago

I have heard that cancelling a credit card does lower your credit rating, (((Princess))). If you're able to get loans now I'd probably just leave well enough alone, pay off your credit card debt like you want to, and not apply for any new cards. (I've heard that having an application rejected or obtaining a new credit card also damages your credit rating, if the ratings agencies feel you have too many credit cards already, which they might, considering that most people in college have low incomes and limited credit histories.)

by MM- 5 months ago

Yes, it can, because part of your score is determined by the amount of money you owe versus your total credit line. So by closing an account, you change the ratio of total debt to total credit, thus adversely effecting your score.

by eric k- 5 months ago

DO NOT CANCEL! The main concern here is account age. The scoring formula factors in the age of your oldest account, the age of your newest account and a blend of all ages referred to as 'average age of accounts' or AAoA. Assuming these are the only two tradelines on your reports, your oldest account is 18 months and your newest is 4 months, giving an AAoA of 11 months. If you close the older one, it's still counted in the average age, but it freezes at 18 months (or when you actually close it). As the newer one grows older, your AAoA will still grow but much slower than if that older account was still open. With only 11 months AAoA, building that account age is very important to your credit score, even if you never use that account or only sporadically. Also, if you close it, it will drop off your reports in 10 years and won't get counted in your age at all! Since you don't have a purse full of cards, there's nothing wrong with leaving it open. RULE OF THUMB: Don't close your oldest card unless you can't live with the annual fees, terms and conditions, etc. People with the highest scores (760+) have an AAoA around 19 years, so milk all the history you can from that card. The other big issue is what Eric K is referring to, known as the credit utilization ratio. Your ratio on the older card is 42% (500/1200=0.42), 13% on the newer one and a combined ratio of 27% (655/2400). In your case, if you paid off the older one and canceled it without paying off the newer one, you'd actually benefit since your total ratio would go from 27% down to 13%. Your score takes a hit when your ratio goes over 35%. Typically, it's people with more three or more cards who get nailed on ratio when they close one card, since they lose the limit but don't pay down other balances, making their ratio go up. Not a concern for you. If I were you, I'd keep the card, but keep the ratio under 30-35% on both accounts (i.e., no individual balance greater than $420 reporting to credit reports and no more than $840 combined, given your current limits.) If you want to look smoking hot in your credit score, restrict yourself to no more than 10%. That 760+ crowed I mentioned only use 7-9% of their available credit. I'd urge you to keep that older card open and just use it here and there. It doesn't matter that it's from an out of state bank; that's fairly normal. A closed card with good payment history helps your score, but not nearly as much as one that's still open and active.

by jle4044- 5 months ago

if you close the account in good standing, it would actually improve your credit, because you would lower your amount of risk. but if you close it in bad standing (ie you dont pay the bills) then that would have a negative impact on your credit.

by Eric- 5 months ago

Do not close the card cause it lower you available credit line. You also can use this service to pre-estimate future scores for different scenarios of credit card payments. - creditreport.fateback.com

by Round- 5 months ago

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by Anita Smith- 5 months ago

Yes there will be a negative impact on your credit. One component of your credit score is your debt to lines of credit. As long as you continue to pay on time and don't utilize more of your limit, your score shouldn't drift much. Scores fall mostly from paying late or not at all.

by something stinks- 5 months ago