‘Too many CC’s, OK to close newest ones?’: I was drowning in $40k credit card debt until I turned it around. Now, do I close my newest bad cards or keep them for my credit score?

Hi Money Minder,

So, I used to be terrible with credit cards. Like, really bad. But I turned my act around a couple of years ago and now I’m debt-free for almost two years. My credit score is sitting pretty in the 740’s and just keeps climbing slowly.

Now, here’s the dilemma – I’ve got a bunch of credit cards. Some are great, like my 16-year-old Capital One card and a couple of Chase cards from 13 years ago. But then there are the bad ones. Three from CreditOne and two from Upgrade, all with sky-high interest rates of 29.99% and pesky annual fees. I don’t use them, don’t plan to ever use them, yet here they are.

Should I just rip off the band-aid and cancel these cards, even if it means a small hit to my credit score? Or should I hold onto them, pay $300 in annual fees every year, just to keep my average credit age up?

When is the right time to say goodbye to bad credit cards? Would it be smarter to close all the cards I’ve opened in the last 6-7 years and only hang on to my best (and oldest) cards?

Thanks for your help!

Retired and Relieved to Be Debt-Free

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the important step to become debt-free and improving your credit score! It’s evident that you have made significant progress in managing your finances. Regarding your question about whether to keep or close your old credit cards with high-interest rates and annual fees, it’s essential to weigh the pros and cons.

While closing these cards might result in a small dip in your credit score due to the impact on your credit utilization and average account age, it’s crucial to consider the financial cost of keeping them open. Paying $300 per year in annual fees for cards you don’t use seems counterproductive, especially when you have excellent cards with higher limits and better terms.

A practical approach would be to prioritize your financial well-being over maintaining a slightly higher credit score. You could consider canceling the creditone and upgrade cards to avoid annual fees and high-interest rates. Focus on maintaining a healthy credit utilization ratio with your remaining credit cards and continue paying them off in full each month.

Since your oldest cards are also your best cards, closing newer accounts might have less impact on your credit score. Ultimately, by eliminating unnecessary fees and minimizing the risk of accumulating debt on these lesser-used cards, you can continue on your path towards financial stability and long-term credit health.

Remember, it’s essential to regularly monitor your credit report for any changes and adjust your credit utilization as needed. Keep up the good work with your responsible credit card usage, and you’ll continue to see your credit score improve over time.

Best of luck with your financial journey!

Farewell from THE MONEY MINDER.