Feb 18 2010

I’m canceling my oldest credit card

The experts say you shouldn’t do it. They say you shouldn’t cancel your oldest credit card, since part of your credit score is based on how long you’ve had an active credit history.

Well, too bad!

My first credit card — a Citi card I opened in 2004, I think, has been inactive for more than a year. We have one credit card that we still use for some large purchases (and we pay it off right away, of course). It earns us cash back, whereas my first card had no rewards program.

The old card will start charging a $60 annual fee unless I spend at least $200/month on the card, or some nonsense like that.

I think it would be a challenge for me to put that much on the card each month.

Closing this account will leave us with one credit card account only. I think that’s enough.

Our credit score is already starting to creep down, in part I think because we no longer have a car loan and don’t carry other types of debt. It’s funny how you can be penalized for being financially responsible, ya know?

We’ll still use our active credit card from time to time just to keep that active. We’d like to buy a house in a few years, and that’s the only reason I even remotely care about my credit score.

I want to get the best possible mortgage terms we can get.

12 Responses to “I’m canceling my oldest credit card”

  1. I received an letter from Citi as well, called right away and was assured the fee will be removed. This card is also the oldest I have (since 1999) and the only reason I keep it is because of the credit score. Give them a call.
    .-= Yan´s last blog ..Jack In the Box : $1 Off Grilled Sandwiches =-.

  2. Another example of how our credit system doesn’t work… grrrr. But good for you, for not letting the company pressure you. Although I agree with Yan, it might be a good idea to see if they take off that fee if you do still want to keep it open. But it’s ridiculous to keep it open just to get a better score. You should be rewarded for needing less cards!
    .-= Bethany B-A´s last blog ..Productive weekend…? =-.

  3. Do it! I think you are doing the right thing. A few years ago I canceled my longest history card and my score did go down a little but it went back up. I wouldn’t worry too much about it. It sucks that you get penalized for not using credit!
    .-= Mrs. Money´s last blog ..Is Phantom Electricity Draining your Bank Account? =-.

  4. Ugh. That is so annoying! We have three credit cards between us that we barely ever use — two AmEx and a Bank of America. The Bank of America is my oldest card. If they try to pull this crap, I will definitely cancel it. You can rebuild your credit in other ways.
    .-= Karen´s last blog ..Slow & steady =-.

  5. When you cancel the card, make sure to specify that you want it to be listed as the owner’s choice- if you don’t then it could look like the bank canceled the card on you and that would not look good to future lenders.

  6. Oh I wish I had known what Shelley said. I had no clue it would do that.
    We have no credit cards, and today I am mailing in a check that will pay off the car! I can’t wait to have a title in my hands! And the money that we were using to pay the car payment will be used to make double payments on a personal loan to pay that off (in less than a year), as well as build up a bit of a savings account. So excited to get rid of debt!
    .-= Jes´s last blog ..Very good news… =-.

  7. Of course, you don’t have to have a credit score to qualify for a conventional mortgage, but I’m sure you know that. We got a 4.75% 15-year loan a year ago.

  8. I got the letter from Citi and called the number to “opt out” of the fee and cancel the card. When they asked how they could help me I told them I wanted to cancel. She clicked a few buttons and said thank you, your card has been canceled. Lasted about 30 seconds. No trying to convince me to stay, no offers, nothing. Sounds like they are used to it…

  9. I just called Citibank again and guess what, they have not waved the fee and there is no record of it being done. The rep said she will put a request this time and asked me to call in 4 days to verify if the request is granted.

    It is funny that I have another card from Citi which didn’t get any fee added (at least yet). Not sure how they pick them…
    .-= Yan´s last blog ..e.l.f – $2.45 Off a $5 Purchase =-.

  10. It is crazy all the new schemes and ideas the credit card companies are coming up with. Crafty! And the small print that they send to explain things. Hard to understand and stay up with!
    .-= Ted´s last blog ..Boo to credit card companies =-.

  11. My suggestion also would be to contact the creditor to see what your options are. If the creditor isn’t bending, and you decide to cancel, please make sure that you follow up with Shelly’s advice so that it doesn’t indicate on your credit profile that it was closed by the creditor.

    I was just reading another guy’s experience with closing his account due to the recent changes taking place and he stated his credit score only decreased by a little over 10 points. Not to say that would be the case in your situation. Make sure you monitor your credit report by getting a free copy if you decide to make a change.

    Good luck.
    .-= Lillie´s last blog ..What everyone should know on how to avoid a tax audit. =-.

  12. I got the same letter and opted out of the $60.00 fee and cancelled my card. They didn’t try to keep me as a customer either. It was a very low interest card for me that I’ve had for years but will pay it off under the current terms and not have to think about having to spend $2400 to get that $60 back.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

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