Question about Credit

[Dyepaintball12]

I read that your credit score is based partially on the amount of time you've had open credit lines, so:

If I have a credit card that I opened about a year ago but don't want and can get the yearly fee waived, should I just cut it up/not use it but NOT cancel it?


Thanks,

Dye

[shadroch]

That would depend on wether you should be concerned about your credit score or not. If you are not planning on buying a house, your credit score is meaningless unless it is very low.
Having an open line of credit might lower it a few points, but is gaining a few points on a fairly meaningless item worth more than having access to that credit down the road. Thats a decision you need to make.
I'd surmise that the fact you were able to get a new card last year when the banks were pretty tight in opening new accounts is an indication you don't need to worry about your credit score.

[tthree]

I have always kept my credit spotless, always paying cards off each month unless I had a 0% offer (these aren't free anymore unless starting a new card), never being late with a payment etc. I just have one spot where a disreputable company (IMHO) pulled some underhanded stuff to dredge up something that was to never be on my credit report. I have been told opening and closing accounts hurts your score. Only 1 per year of the combo of the 2 are OK. I would call the card in lost and not activate the replacement. This will protect you from unauthorized use on an inactive account (although you should not be responsible for this type of fraud. It can save you from doing a lot of paperwork). The downside is if you want to use it you probably would need another new card as they assume you never got that one after a while and deactivate it's ability to become active. The other thing to remember is totally inactive accounts are often closed by the issuer after enough time. Not all do this but it is fairly common. It sounds like you are trying to build a credit history. Using the card a little will help with that. I never get a card with a fee. They pay me to use the card not the other way around!

[ms069279]

Originally Posted by tthree

I have always kept my credit spotless, always paying cards off each month unless I had a 0% offer... I never get a card with a fee. They pay me to use the card not the other way around!

X2 -- Well Put Tthree!!

Dye, if you could get the fee waived, then I'd keep it open and not use it. As previously mentioned, the opening and closing of accounts DOES hurt your FICO score.

Unless, like Tthree suggested, if you're trying to build credit, in which case, you should show some activity on the card - but make sure to pay off the balance in full, at the end of the month.

If however, You cannot get the annual fee waived, then the choice I'd make is to ride out the remainder of time that you already paid for (annual fee), and in the meantime, shop around for a new card w/o an annual fee and go ahead and cancel the current one.

To be perfectly honest, having a card for only 1 year won't make dramatic changes to your credit history, however, it will be yet another year of history that you will have to make up w/ the next card.

[shadroch]

I would not be so quick to reject all CCs that have annual fees. Some of them have great benefits that far outweigh the fee.
As an example- Virgin offers two cards. One is a no fee card that gives 5,000 points to start. The other is a card with a $49 fee that gives 10,000 points to start and offers a $150 companion ticket each year.A RT from NYC- Vegas is almost always $300plus. You do the math

[blackchipjim]

You have to watch what you do to your credit rating if you plan on using credit. Bad credit scores will hurt your ablility to get lower interest rates on big ticket items not just a home. I have taken loans out for my childern because I qualify for lower interest rates then they do. Keep a few cards and pay off balances in a timely manner. The days of carrying balances are over and should be avoided if at all possible.

[ms069279]

Originally Posted by shadroch

I would not be so quick to reject all CCs that have annual fees. Some of them have great benefits that far outweigh the fee.
As an example- Virgin offers two cards. One is a no fee card that gives 5,000 points to start. The other is a card with a $49 fee that gives 10,000 points to start and offers a $150 companion ticket each year.A RT from NYC- Vegas is almost always $300plus. You do the math

I was replying to Dye's inquiry, and whether he should keep a card w/ annual fees or not. I agree 100% with respect to not rejecting all cards that require an annual fee. As a matter of fact, I just as recently as 2 days ago, signed up for the Capital One Venture card, with very similar details as the ones you mentioned - that is, 2 FMM for every $ spent which is equivalent to 2% for an annual fee of $49, as I plan to travel much more frequently in the upcoming months.

[Dyepaintball12]

Another good thing about CC's with fees is that a lot of the time they 1) come with great bonus offers when you get approved and 2) they waive the first year and it's pretty easy to get other years fees waived. (This probably doesn't apply to AMEX cards like the Platinum Card with the $450/yr fee)

A really good credit card with a fee (waived the first year) is the Chase Sapphire Preferred which gives 50,000 bonus points when you spend 3k in the first 3 months and gives 2x points on all travel and dining. Those points easily transfer to a large number of hotels and airlines!

[tthree]

I just want the CASH back so take my advice with that in mind. If you like to use the points for items and services you are probably better off following other advice.