There’s an old controversy in card-enthusiasts circles whether to keep free card and bank accounts or close them out. Usually inertia takes its toll and accounts remain dormant for a while. Eventually some banks will close out inactive accounts.
Some people like keeping dormant cards in case a deal comes along. For example, there might be a Chase Offer or an Amex Offer or a spend offer which pops up.
Today I decided to lower my mental clutter and close out the inactives. Two Synchrony cards were easily closed out from within the online login. I logged into an old Best Buy Visa account, only to discover it’s already been auto-closed by issuer. Two Amex cards got the axe – Amex’s phone system can close out a card for you. Two more no-fee Chase INK cards are still on the chopping block.
I also downgraded Blue Cash Preferred to a Blue Cash Everyday card to save the annual fee. My shiny new Citi Custom Cash can potentially get 5% at the Grocery, just 1% less than the Amex card pays. Also, we often see Grocery in the rotating category from Chase which I value at more than 5%.
Be sure to always zero out any rewards balances before closing. In the case of Chase, for example, I simply transferred the Ultimate Rewards points to another active card. One of my Chase cards also had a small $5 balance from the Grocery Chase Offer – I loaded $5 to my Amazon account to zero out that balance and then I’ll close out the card.
Wanted to get people’s take on this if not too late: how long do you suggest holding on to business cards if one is interested in churning? On the personal card side consensus seems to be at least a year.
I would be cautious about closing out accounts, particularly older ones. Your credit score is calculated in part by the average age of your accounts, as well as your utilization in proportion to your total credit line. Cancelling old accounts and decreasing your credit limit could potentially damage your credit score. Newer accounts and accounts with smaller credit lines are safer to close out.
Closed accounts are still factored in your AAOA on FICO scores
I am in 2-player mode and we have gotten good mileage out of the BCP upgrade offers (get $150 minus AF for spending $1000). I downgraded mine to BCE in May, and I recently noticed a “Ready to Upgrade Your Card?” link in my Amex offers. When I clicked through it offers me $75 for spending $1,000 (no fee waiver). Not sure how narrowly (if at all) it is targeted.
I noticed the same offer yesterday but didn’t accept because I do most of my grocery shopping at Walmart Pickup which no longer codes as grocery. I don’t know if it will be worth it to have a net annual fee of $20 so I’m going to hold out for hopefully a better offer.
Interesting post/move. I’ve always wondered if other credit churners (lotsa) card holders do this. I had an account closed by BOA that was almost 18 years old. It was my first credit builder. I had a history with that card. College parties, traveling, spending for holidays (returns) and finally divorce!.. LOL.. It kinda felt like it was a credit line that defined my life. However, in the end, I got the most outta if and the rewards were good. (Tears sadness and joy!) Thanks everybody for teaching the ropes of a good credit card. Churners live forever! 🙂
The idea of using Citi Custom Cash for only groceries for the 5% vs AmEx Blue Cash Preferred for the 6% less AF is interesting. I would have to see if I am netting >5% on groceries. I have been hitting the $6K limit in December the past two years. With Bidenflation, that will likely be true this year as well.
The next question I would have to ask is whether 6% cash on streaming services (especially purchases in Apple and Google in-app purchases is greater than using the AmEx BCE for 3% of online purchases.
Scratch that. I read the fine print. Purchases through digital wallets are NOT considered an “online purchase”. Nevermind. If Google/Samsung/Apple Pay was considered “online”, then I would be more inclined.
Looking at the Citi Custom Cash, the only categories I do any significant purchases are Grocery, Restaurants, and Gasoline. I could not find in the fine print if purchases through digital wallets at eligible merchants count toward the 5%.
Update: Talked to Citi customer support. Digital wallet purchases at eligible merchants DO NOT count toward the 5% cash back category.
BS, it does
Max grocery net cash back with Custom Cash is $300/yr. Max with BCP is $360-$95=$265
One niche use of the 6% on streaming I’ve benefited from with the BCP, Google Fi phone service codes as streaming and gets the 6% return rate.
Closing the business cards is always a good decision because they do not report to your personal credit anyways.
Closing the other cards are a bit more iffy, but DOC likely has such a strong credit profile, It makes little difference for him.
For the average person or churner, I would be much more cautious closing any card that doesn’t have an annual fee. You take a hit when you open a credit account, and it only benefits you going forward. (assuming you don’t use it or keep it paid off. )
can someone confirm if Citi Custom Cash correctly treats Walmart neighborhood stores as grocery or block by name like CHASE?
No. Citi Custom Cash does NOT count Walmart neighborhood stores as grocery (nor any type of Walmart). I tried a few stores of each type. For CCC, Walmart does NOT count as grocery, period.
thanks. AMEX BC* cards are the only ones I know to treat Walmart neighborhood stores as grocery and Walmart superstores as non-grocery
It’s true that AmEx BC* makes that distinction (have tested that too), but I don’t know what others do.
If a card only works at WMNM you can buy WM GC there and use at all WM and SC.
Synchrony Venmo Visa codes my local Walmart Supercenter as a grocery.
Anyone know if closing the account would be the same as letting the issuer close it? Would my credit score take the same toll?
Should be the same net affects your credit. (I.e. no / very limited immediate effect but over the long term you will no longer have that card helping you.)
Doesn’t closing existing CC accounts lower your credit score, or is that a non-issue?
They remain in your report for some years. It may lower it a bit because your Average Age of Accounts lowers, but it’s only temporary.
Reducing your total available credit can absolutely lower your credit score. The business cards he references wouldn’t be relevant, and I suspect the personal cards won’t significantly reduce his overall credit limit (closing 4 of 30 credit cards matters much less than closing 4 of 10 – not because of the number of cards, but because it correlates to overall credit limit across all cards). On the flip side, the rules keep changing – first you could churn, then you had to wait 24 months after earning a bonus, then you had to wait 24 months after closing the card. If you hope to earn a bonus again in future, it makes sense to close the card as soon as you feel comfortable after earning the bonus.
Before I close an cc, I do a credit reallocation, that way I don’t lose the credit and mess up my ratios. For example if I have say 4 cards from chase, I will reallocate most of the credit limit to the cards I am keeping, then close the other credit card(s).
It’s easy to say whether closing CCs lowers your credit score, but hard to say whether its a “non-issue.” Personally, I consider my credit score a non-issue, because I have nothing in the future that will benefit from a good credit score: no new mortgages planned, I buy used vehicles with cash, etc. Now, this doesn’t mean I would blow my credit for little gain; after all, if I was to suddenly be divorced or widowed, I might need my credit to find a new vehicle, house, etc. But I do feel free to close credit card accounts when I see fit, apply for loans and lines of credit to score bonuses, etc., without too much worry. As long as I remain somewhere in the Excellent-Very Good category, I figure I’m all set. Someone with a credit score below this range should probably exercise a lot more caution when considering whether to close a credit card. Ideally you’d downgrade to a no annual free alternative.
The nice thing about closing those Chase cards, you can reallocate all, or most of limit to another Chase card. Which is nice for multiple reasons, closed one card not used, more spending power on another which has more utilization cushion, and no extra HPs needed for that increase.
I’ve done this to consolidate cards that are no longer needed, but now the issue I have is banks think I have too much available credit vs my stated income, so they won’t approve me for new offers, which is frustrating.