Question

Perfect time to ask you guys my question. I am going to receive my tax refund and had planned to fully pay off three small credit cards and pay some down on my other two. My question is, do you guys close every credit card you pay off? I originally got the credit cards to boost my credit score and of course maxed them. Will my credit score drop when I close those three out?  

Answer 1

Yes it absolutely will

Answer 2

I would close them if they have annual fees or if you find yourself not able to use them responsibly. Otherwise stash them away or use and pay as you go.  

Answer 3

Personal preference and depends on your goals. For example personally I’m closing them, because my goal it to not be in debt and want to stop the debt cycle. I will keep a couple but I’m closing most of them.  

Answer 4

Yes. In the short term. Granted, I only cancelled one but I did it last year and still over 800. If you don't plan on buying a house or opening any lines of credit anytime soon, cancel them.  

Answer 5

If you can keep them open, but only use a small percentage of the limit available, it will help your credit score. Let’s say you have a credit limit of $10, 000, and never charge more than $500, your percentage of use is only 5% and will be considered a good ratio. Also, always pay your cards in full every month or don’t use them. Closing them will definitely lower your score, but if you know yourself and can’t resist getting back into debt, you are still better off closing them.  

Answer 6

Good info guys. Thanks! I have five total. I am planning to pay off the three low ones because they have a yearly fee. Then I will keep the other two without fees and get their balances down. I can’t wait!  

Answer 7

Hopefully I can control myself this time!  

Answer 8

The only other thing to think about is if you close them, your credit utilization will go up even though you paid these off. So maybe keep them open until it is time to pay the annual fee again?  

Comments

@leucotomy it really would depend on how much buffer it gives you vs the annual fee. But yes consider keeping it to have your utilization there. I don’t want to throw numbers out because a lot to one person could be a little amount to someone else. Just something to consider.  

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I just can stomach paying the annual fees again on the three cards. Ugh. Waste of money

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@leucotomy at least when I spent money on the cards, I got a lot of crap I didn’t need for it Ha ha

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Especially when those fees could go to other debt! Just wanted to throw it out there so folks reading could consider the whole picture because it might make sense to hold that open in the short term (ex: applying for a loan or something)

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@mambo wow. Never thought of that. Will do.