Credit Card Renewal - Cancel?

Just lock it up in a safe place.

-Mark Bole

I wonder if your credit card company was sold to another company. For example, MBNA was recently sold. All of my MBNA cards are being reissued. They still stay MBNA, but also say Bank Of America, too. Each one was extended, and none were up for renewal.

If you don't need it, cancel it. It is a risk waiting for something bad to happen. Eliminate the risk. I wouldn't worry too much about your credit score. Unless you are looking to get credit for something major in the next few months, it will be a non factor. Cancelling a card may ding you 10 or 20 points, not the 50 or 100 points that it would take to make a difference. And those points come back over time as long as you behave.

-john-

I am with you. Even though there are laws limiting liability I don't see having more credit on a CC than is reasonable.

When I applied for a cash back Master Card CC from my credit union after canceling a non-cashback CC from another source, they asked _me_ what limit _I_ wanted. I picked a reasonable limit (to me), and that is what it is.

Hi:

I believe that you can safely cancel the credit card. While, I will not claim to be an expert on the credit scoring model, you do have other credit cards which you probably use now and then. The usage of these cards will allow you to maintain a good credit score.

BRH wrote:

Since this is a financial planning newsgroup and we get this question frequently, I'd like to throw my $.02 in.

I believe that living within one's means is the beginning point for all good personal finance, and that nothing starts to work until a person does it. Debt (unpaid balances at month-end) is evidence that a person is not living within their means.

Yet many consumers worry about their credit rating - it's as though they are intentionally planning to go into debt. I realize that many people don't see debt this way (which to me explains why most folks never become financially successful) - but it does not excuse the practice.

One way or another we are all involved in products, services, etc., but I consider our failure to stress good personal finance (and avoidance of debt) a black mark on our professionalism.

-HW "Skip" Weldon Columbia, SC

I agree with this. My advice had nothing to do with maintaining or improving the OP's credit score, although that is a nice side benefit.

In the case of the OP, it was a credit card he never uses, so clearly this is not one that has an unpaid balance at the end of the month.

The risk of mis-use? This is where I disagree with the other replies. The difference in vigilance required between three credit cards, and three credit cards plus a fourth one never used, is not very big, I know from direct personal experience. How is the card going to be compromised if he never uses it and has it locked up in a safe place? (beyond the risk that *all* cards carry of the issuing bank's database being compromised). Besides, most major cards provide a variety of additional security features, such as virtual card numbers, paperless statements, extra PIN codes for on-line purchase, e-mail alerts, and so on. Set these up once, and then don't lose sleep over it.

Another useful technique: card "crop rotation". Use one card exclusively for a month, then let it lie fallow while you use a different card the next month. This makes it much easier to reconcile your monthly statement even with multiple cards, since you know any off-cycle charge on a given card is suspicious.

Finally, and here is the key: it's much better by far to have credit available, and not use it, than to need it and not have it. Once you've already incurred the overhead of obtaining a card (including employment information), you might as well keep it, used or not. As for total open card accounts, three to five is a good range, one both the OP and myself easily fit into.

-Mark Bole

I knew there was a quote that reflected your thoughts;

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."

From David Copperfield (by Charles Dickens) 1849

JOE

Well, if it was me, I store it away in case there's an emergency or in case the bank comes out with a rewards program or 0% BT offer that I could take advantage of. Since I wouldn't be actively using and monitoring it, I would also sign up for (free) e-mail alerts of any activity on the bank's web-site in case someone gets the number and goes on a shopping spree.

However, if you're main concern is the effect on your credit score, you can try FairIssac's free modeling tool at

Using your simple definition of debt above, I'm not living within my means because I play and profit from rewards credit cards and the 0% BT game. Appearances can be deceiving, though.

I live well within my means, proceeds from the BTs are tucked away earning

I do realize that my story is not the norm, though, and I don't recommend my little credit card hobbies for everyone. I wouldn't say I worry about my credit rating or score, but I do check it periodically to make sure it stays healthy.

Unfortunately, worry about one's credit rating can't be limited to plans to go into debt. In the last 5 years, I've changed jobs 3 times (long story about lay-off from one employer and retirement from another). Each new employer checked my credit rating. Last summer I changed insurers for my house. The new carrier checked my credit rating.

"joetaxpayer" wrote

:-)

Here's another gem, by British author Anthony Trollope of the same era:

"And the happiness of a household depends so much on money."

-- Mrs. Thompson, _The Château of Prince Polignac_, Anthony Trollope, 1859.

What the heck is a BT?

Elizabeth Richardson

From the context, I'm pretty sure it's "balance transfer". HTH :-)

Bob

From context I'm thinking "balance transfer". Since I did the opt-out, I'm missing a whole world of juggling debt and saving/earning some money.

JOE

Balance Transfer. Those unsolicited teaser offers you get in the mail. Some are 0 or very low interest, with 0 or low transfer fee, for an extended duration. Take the money, park it in a CD with expiration lower than the duration. Pay the minimum monthly, pay the balance back before the due date by cashing in the CD, and pocket the profits.

If you set up automatic payments with the lending bank, it's automatic money.

I do the same thing, and just paid back > $20,000 borrowed without interest for 1 year. The profits are in the MMF where I had stashed it. Those offers aren't so common anymore, with interest rates a little higher.

Thanks to all who responded to the original question. I decided to renew the card at a much lowered credit limit, and have stashed it away for limited usage.

I've heard of putting CC in water, then putting it in freezer, preventing impulse purchases (you have to wait as long as it takes to melt the ice before using card).

While I don't have any cards in my freezer, I have several cards companies gave me, all safely stashed away. I believe my annual credit card limit is well above my annual income.

use judiciously and you will be OK.