Shoud I keep 0 balance credit cards open or close them - Knowledge Base: 0 Credit Cards

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Shoud I keep $0 balance credit cards open or close them?

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October 3, 2008 - I just transferred 2 credit card balances to a better credit card - lower interest rate and cashback rewards.. Now, I have these 2 $0 balance Visa and MC credit cards, as well as a Bloomingdales and Pottery Barn credit cards that have been $0 balance for years, I think.. Is it better to keep $0 balance credit cards open, or is it better to close them, in reference to my credit score.?

Responses:

Get rid of them and invest your money instead
YOU SHOULD CLOSE YOUR ZERO BALANCE CARDS. IF YOU KEEP THEM OPEN & NEED TO GET A LOAN OR APPLY FOR ANY CREDIT..THE OPEN CARDS CAN RUIN YOUR CHANCES. THE CREDIT LIMIT ON THEM IS AVAILABLE TO YOU, & A THE NEW LOAN COMPANY WILL KNOW THAT THE MONEY IS AVAILABLE TO YOU.. & IF YOU USE THAT MONEY , YOU MIGHT OVER EXTEND YOURSELF & NOT BE ABLE TO PAY BACK THE MONEY YOU OWE THEM...SO THEY WILL NOT APPROVE YOU REQUEST. I KNOW FROM PERSONAL EXPERIENCE.
This is one of those "it depends" answers. Are you trying to break bad spending habits or trying to improve you credit score? If its habits, I would recommend removing the temptation and closing the accounts. If its credit score, then consider keeping the cards and charging occasionally on them. Credit bureaus like to see credit in use--after all they are in the credit business. Its always a good rule of thumb to never go above 50% of the approved dollar level, to pay on time (always) and to maintain a balance over a period of a 6 -12 months. You'll always score better if you follow those rules. Sure its ok to go to zero balance, but then add a few charges. All this shows that you are a dependable consumer.
Indeed balance transfer saves a lot of money and can save things from going worse, but many people simply don't know the right way to do balance transfer. This article takes a look at the correct process to initiate and complete the balance transfer. The first thing to look out, when a person wants to transfer his balances is a credit card which offers the lowest apr rates and lowest balance transfer fees. Many online credit card companies offer credit card comparisons. It is indeed a good practice to search for the credit cards using their services and decide on a credit card which offers the maximum savings. It is important to note here that balance transfer APRs depend on a person's credit history. If the credit card in question offers the lowest rates, it is definitely for those with the best credit ratings. There are different balance transfer apr's for people with lower credit ratings. So, it becomes imperative that one chooses the credit card which offers the lowest apr and balance transfer fees for his credit ratings. When you decide for a balance transfer it doesn't mean that your obligation for payments towards your outstanding balances with the existing credit card company cease to exist. You will have to pay the credit card company all the monthly payments. One way you can save money is to just send the monthly minimum payments to the existing credit card company. This way you won't default and invite penalty. The next step is to sign up with the credit card which you sought for transferring your balances, and fill up the balance transfer application. Read more from: http://www.credit-card-gallery.com/article/414,The_right_way_to_credit_card_balance_transfers
Your credit score is higher when you have credit cards that have been open for a long period of time. I made the mistake of closing some I'd had a long time, and it negatively affected my rating by a few points. In my experience, you're better to keep them open.
Do your cards have an annual fee ? If they do then close them and save the money. Store cards have very high interest rates. I would close them as well. 1 or 2 quality cards from major banks is best from a credit rating point of view. Lots of cards may hurt as the temptation is there to get into serious debt problems. Ian M
It's better to close them. First of all, you don't need them. Second, having more than one or two major credit cards hurts your credit score, because it means you could too easily get yourself deeply into debt. Third, it's too much temptation. (As you know from experience, the more cards you have the harder it is to keep track of what you're spending and the harder to pay it back, right?) You could keep the two store cards.
This depends on your balances. A number of things factor into your credit score. Generally, old credit is better than new credit because you have a history established with that card. Leaving an old card open is usually a good idea if you have just opened new accounts. A new account is considered new for at least two years and any account over 7 years old is considered great for your score. Too much available credit can hurt your score so take a look at your total available credit compared to your annual income. Here's where your balances will be the determining factor. A good part of your credit score is your used credit to available credit. If you just maxed out the new card with the balance transfers and then close your old cards, you will show 100% used credit which will hurt you. Example: $1000 visa (paid off) $1000 MC (paid off) $2000 New ($2000 balance) this would give you $2000 used of $4000 available for a 50% used rate. Ideally, you want to keep your used to available credit ratio around 30%.
Open. For some reason no one understands when you close accounts your credit score will go down.
There are lots of opinions about closing or keeping the cards open. A big chunk of your credit score is based on the debt to available credit limit ratio. If you close the credit cards, the total available credit limit goes down. This would make the debt a higher percentage. Also, closing an account, closes the history. My personal opinion is that keeping credit cards open just for the sake of having a stack of credit cards is stupid. You have to monitor and secure those cards and they are all sorts of potential problems. Close the store charge cards. Keep open the oldest major credit card without a annual fee and close the other.

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