Cancel Credit Card?

[Street_Soldier]

So my credit card has expired on the first of the month, my credit card company has sent me a new one but I have NOT activated that card. I do not have any balance on that account.

I am switching to a new credit card company.

I was wondering do I have to cancel my account with my old credit card company or will they likely get the picture if I do not activate the new card they gave me?

I've always heard things like canceling credit card accounts is bad for credit and having too many open credit accounts is also bad.

What should I do?

[Thaco]

canceling a credit card is also bad for your credit

[oilerfan4lyfe]

I think the general rule of thumb is that you shouldn't cancel a credit card within 6 months of when you first have it...obviously if yours expired you've had it for a couple of years, so I don't see the problem with calling them and asking that it gets cancelled.

Your credit limit does affect how much credit you'll be able to obtain from other sources. For example, if you want to get a Line of Credit from a bank but have too much available credit on your cards, that can sometimes affect you negatively.

I think most Canadians have 2-3 credit cards so unless you have more than that it shouldn't affect you too badly, as long as you pay at least the minimum every month.

Also, some credit card companies charge inactive fees if you don't use the card for a certain amount of time. You might want to look into this too since it makes little sense to pay for a card that you're not using.

[Tik-Tok]

Originally posted by Street_Soldier

I was wondering do I have to cancel my account with my old credit card company or will they likely get the picture if I do not activate the new card they gave me?


No, they won't, they'll keep your account until you call and cancel.

I had a MBNA card that I never activated for almost 3 years, finally while cleaning up I found it and called to clost the account. They won't do it for you.

[Kloubek]

It will be fine. Pay off the original card, then cut it up along with the new one. You might want to get them to stop sending paper invoices too, if they are currently doing so. Then you won't be as pestered, and you'll be helping the environment too....

[Xtrema]

I have 3 cards and only used one.

VISA is great when you travel outside of North America.

Mastercard is great in NA

AMEX is good if you shop at CostCo.

As long as there is no annual fee, just keep it.

[flipstah]

If you cancel the card with no balance whatsoever, does it affect your credit score? And what about doing a credit check on yourself?

I wanna know why Amex declined me. :thumbsdow

[Dycker]

If you have debt, it's better to have more available credit.

Don't understand why this helps your credit score, just heard it does.

[broken_legs]

Originally posted by Dycker
If you have debt, it's better to have more available credit.

Don't understand why this helps your credit score, just heard it does.


% credit utilization is a huge factor in your FICO score.

If you have one CC maxed out spread the balance equally between 3 and it will increase your FICO score.

Don't cancel the card. Call and ask for increases every 6 months.

The only time that you're un-utilized credit will be an issue is when you are applying for a mortgage, and then its only when you are dealing with a 'mortgage specialist' and people that make real decisions at the bank.

[Mys73ri0]

Originally posted by Street_Soldier
I was wondering do I have to cancel my account with my old credit card company or will they likely get the picture if I do not activate the new card they gave me?
I've always heard things like canceling credit card accounts is bad for credit and having too many open credit accounts is also bad.
You will need to cancel your card, otherwise it will stay active. Cancelling 1 credit card because you applied for another will not adversely affect you. However if you continually apply for new cards and cancel old ones, it WILL affect you in a negative way.

Originally posted by oilerfan4lyfe
I think most Canadians have 2-3 credit cards so unless you have more than that it shouldn't affect you too badly, as long as you pay at least the minimum every month.

Continually only paying the minimum amount will affect your credit score in a negative way.

Originally posted by flipstah
If you cancel the card with no balance whatsoever, does it affect your credit score? And what about doing a credit check on yourself?
I wanna know why Amex declined me. :thumbsdow
You can check your credit with equifax and transunion:
http://www.equifax.com/home/en_ca
http://www.transunion.ca/ca/personal/creditreport/consumerdisclosure_en.page

Its free to look at your credit file once a year, however it does not give you a score. It won't affect you negatively when you look at your own score.

Originally posted by Dycker
If you have debt, it's better to have more available credit.

Don't understand why this helps your credit score, just heard it does.
If your loan shark is only willing to lend you $5000 max and you consistently owe $4900, it looks bad. But if your loan shark is willing to lend you $100,000 but you only borrow $4900, you have a little more breathing room. Something along those lines.

Originally posted by broken_legs

Don't cancel the card. Call and ask for increases every 6 months.

Most FI's aren't giving out credit limit increases as easily anymore and will require a credit check to do so unlike pre - US economy meltdown.

[broken_legs]

Originally posted by Mys73ri0

You will need to cancel your card, otherwise it will stay active. Cancelling 1 credit card because you applied for another will not adversely affect you. However if you continually apply for new cards and cancel old ones, it WILL affect you in a negative way.


Most FI's aren't giving out credit limit increases as easily anymore and will require a credit check to do so unlike pre - US economy meltdown.

Cancelling any credit account if you hold a balance will negatively affect your credit score. you instantly increase your credit utilization when you cancel an account.


As someone who regularly increases his credit limits, I can tell you that American Express, TD Bank, and BMO have been more than happy to hand out 15-40% increases over the last year. :)

[Rarasaurus]

If it is a credit card you have had for a long time i heard that if you get rid of it you get rid of the history you created with it. I dont know if that is true. However if it is closing an account you had for a long time might lower your score.

[Street_Soldier]

So after a months time i got my new credit card, a Scotia Momentum. In between time I did not recieve any information whether I was approved or denied. I didn't find out until I called them and they told me that I was approved and that my card was waiting at the closest scotia branch. This was after the 3rd time I called them. The two previous times no one was able to answer that question and after being on hold for 30+ minutes each time they gave me a response like, "we do not have access to that information". Which I thought was really weird cause who else would have that information. I wonder what would happen if I never called them.

Since scotia bank works ridiculously weird hours 10AM to 4PM. I wasnt able to pick up my card until Saturday.

So after a week of waiting I come into the branch and get my new credit card and activate it.

That day I tried using my card and everywhere I go says I am declined. I'm thinking that its a new card and needs time to process in their system.

I try the card a few more times the next day and still it says the card is declined, I thought maybe its a pin issue so I used the defaulted pin for the chip card.

So I call the activation number again the next day to re-activate the card even though I have already activated it. Turns out that they gave me a credit limit of 0. No one even thought to actually put a credit limit on my card. So there I was using a maxed out credit card this entire time.

I kindly ask them if they can set my credit limit to the limit which they approved and they tell me they cannot do it. They say that this has to be done by the branch. Its Monday and so I have to wait another week in order to go correct this information.

So now my card finally works. I connected the card to my RBC account and just have to set up internet banking for the card in order to view my statements.

I read through the documents they gave me and plan to just set it up. In one of the letters it says I can go to
http://www.scotiabank.com/visa to find out more info on setting up this service. Turns out the link doesn't even work. Doesn't anyone there update these websites or documents?

So that doesn't help and I call customer service once again. Turns out that I need a Scotiabank debit card to have access to online banking, I don't know if this is common or not but this is really dumb. They tell me that I have to go back into the branch to get this debit card. At this point I wasn't too happy and canceled. Its just too much work for a credit card. Horrible customer service. I had enough!

Short version Canceling a credit card right after getting it.

Will this negatively affect my credit score?

[FraserB]

Originally posted by Mys73ri0


Continually only paying the minimum amount will affect your credit score in a negative way.



So by this argument, you have a balance of $5000 on a CC and a min payment of $100, if you only pay the $100 month by month it looks bad, but if you are paying $1000/month it doesn't?

[FiveFreshFish]

^^^ Good question. How about $101, $200 or $2500?

[gqmw]

From what I've heard...making the minimum payment per month will not cause your credit score to decrease.

[FraserB]

Did some reading and apparently the only thing that gets reported is if the payment was on time or not. If you are using a large portion of your available credit, this hurts your score but as you bring that ratio down, your credit score "heals" over time.

Seems to make sense.

[Tik-Tok]

Originally posted by Street_Soldier


Short version Canceling a credit card right after getting it.

Will this negatively affect my credit score?

Canceling it, no, but you will now have an inquiry in your credit score for your initial application for the now useless account.

If you apply for more credit in the near future, a lender will see this recent inquiry as a bad thing. As in "Hey, this guy just got a credit card... why does he need MORE credit all of a sudden".

[flipstah]

BUMP.

So I primarily only use 2 cards and have two with no balance, just sitting around.

The second card I'm using is the one that has the oldest credit history, while one of the empty cards is the 2nd oldest.

Will it do any harm if I cancel the 2 cards not being used?

[revelations]

^ No, in the long run having less credit will increase your score.

[Xtrema]

Unless your credit score is already crap, it will take a little hit and recover shortly.

I cancelled a lot of store cards after I got the promotional discounts and my score took a hit for a bit.

[Isaiah]

Originally posted by Thaco
canceling a credit card is also bad for your credit
It depends on the circumstances. It can also improve your
beacon score if your income is too low or if they are department store cards.


Originally posted by FraserB
If you are using a large portion of your available credit, this hurts your score but as you bring that ratio down, your credit score "heals" over time.
Credit utilization ratio. You want to keep it below 20% to avoid negatively impacting your credit profile.

Utilization (being over-leveraged), delinquencies, and inquiries are the top three variables that will negatively affect your credit score after bankruptcies, judgements, and reported collections.

[woodywoodford]

.

[jwslam]

Originally posted by Isaiah
Credit utilization ratio. You want to keep it below 20% to avoid negatively impacting your credit profile.
This is for total credit right? i.e. If I have 5 x $1000 cards and only max out one with the others stale on a regular basis, that's fine?

[flipstah]

I guess I'll cancel mine. Thanks!

Also did a TransUnion analysis thingamajig and it says my credit score is 'fair' but my debt-to-income ratio was 'good'.

No late payments, no deliquencies; it's all green.

Meh.

[Mitsu3000gt]

No need to ever cancel a CC in normal circumstances.

Just cut it up, don't use it, and don't activate new ones when they send them after expiry. If it has a fee just lower it to a free card of the same type.

The only downside I guess is if you go for a mortgage or whatever, they consider all your CC's maxed, so in that case it may be beneficial to cancel it or have the limit lowered to the minimum.

[flipstah]

Originally posted by Mitsu3000gt
No need to ever cancel a CC in normal circumstances.

Just cut it up, don't use it, and don't activate new ones when they send them after expiry. If it has a fee just lower it to a free card of the same type.

The only downside I guess is if you go for a mortgage or whatever, they consider all your CC's maxed, so in that case it may be beneficial to cancel it or have the limit lowered to the minimum.

I don't really NEED the credit as my primary card is a charge card so I'm aware of the max I get from them.

What happens if I don't activate the new card? I have that situation right now with one of the empties.

[Isaiah]

Originally posted by jwslam

This is for total credit right? i.e. If I have 5 x $1000 cards and only max out one with the others stale on a regular basis, that's fine?
Technically yes it applies to total credit but lenders may also look at individual credit facilities as a measure of your credit management tendencies. Maxed out cards are never good but if you must maintain a high usage ratio on one, make sure you drop it reduce it prior to applying for more credit.

The exception is a business credit card. I average $15k/month on one card that I use to accumulate travel points for business but I pay it off in full every month. On the rare occasion that I've been asked about it by a lender, I explain why it's so high and that it's paid in full monthly and it's never been and issue.

[woodywoodford]

Does the utilization ratio count fixed debt ie. student loans?

[Isaiah]

Originally posted by woodywoodford
Does the utilization ratio count fixed debt ie. student loans?
Yes it does, and student loans will also increase your TDSR.

[Mitsu3000gt]

Originally posted by flipstah


I don't really NEED the credit as my primary card is a charge card so I'm aware of the max I get from them.

What happens if I don't activate the new card? I have that situation right now with one of the empties.

I don't think anything happens, but you still have that credit with the company, because if you were to activate it, you would immediately have access to your pre-existing credit amount.

I don't know if credit checks can see your inactivated cards or not, I imagine they would still see the limit you have with the lender but I am not sure on that one.

[shakalaka]

I had 3 cards at one point that I used randomly. Now I only have one, which I use ALL the time. Even for little purchases. RBC Avion and got rid of the other two (CIBC Visa and Scotiabank Visa). Nothing hurt my credit in any way. In fact, I keep getting calls from RBC every now and then saying I've been pre-approved for a credit limit increase on the card or a credit line etc.

[flipstah]

Originally posted by shakalaka
I had 3 cards at one point that I used randomly. Now I only have one, which I use ALL the time. Even for little purchases. RBC Avion and got rid of the other two (CIBC Visa and Scotiabank Visa). Nothing hurt my credit in any way. In fact, I keep getting calls from RBC every now and then saying I've been pre-approved for a credit limit increase on the card or a credit line etc.

More reason to cancel. I'll just keep the 2 cards and cancel the other ones.

I primarily use my AMEX but the MBNA kicks in when I have acceptance issues. As long as you keep the oldest one, everything else is kosher.

Thanks!

[shakalaka]

Yea the Avion card is great for travel points. I get 1 point for ever $ I spend. So I figured, if I am spending the money I might as well get some points for it. Even my $2 purchases are on the card at times. I just make sure that I pay the entire balance by the end of the month which ends up being a fair bit depending on how much I've spent. That ends up being a lot of travel points. I flew to Vegas last year all on my points and I think I could probably easily do another trip now. The Avion is also great because there are no blackouts or any stupid stuff like that when booking travel.

EDIT: And yes, since you're always only using the one card, spending a fair bit on it monthly and paying off the entire balance, you get offered different things like the credit limit increase, credit line etc without having to ask. At least, that's why I think I get these anyway.

[woodywoodford]

How does that work out financially?

I have a 1% cashback card, and the infinite avion. Just based on the cash values of RBC registered rewards, 1 point is 0.8c, so if that value translates through the rest of the rewards cataloque it seems like you'd be better off just getting a cashback card. Or am I missing something here? (I haven't used my points on anything yet hence limited knowledge of what points are worth)