I like to pretend I know what I’m doing with regard to my credit and credit score. I’ve done a lot of research and have made a ridiculous amount of progress on improving things in the past few years.
But even with all of this knowledge and experience, I still can’t decide if I want to close an account I just opened…
I recently made a fairly large purchase, and had opened a new credit account to do so (not a generic “visa” or “mastercard” … this is a card for a specific store). There was no problem with the approval and I got a $3000 limit. I just paid off that large purchase on this card and it now has a zero balance.
The problem is, do I go ahead and close it now that I’m done with it? Or keep it open and help my debt to credit ratio? I look at it like this… some quick pros and cons of CLOSING:
- PRO: One less credit account open.
- CON: Unused $3000 credit really helps my debt to credit ratio.
- PRO: Opening a new account brought down my average credit age. Closing should bring it back up.
- CON: It’s paid off and not really hurting anything just sitting there.
- PRO: Less temptation to use it for anything else.
So I don’t know… they’re not really huge points either way – but I just can’t really decide if it would be best to close it. Well I suppose I should say I don’t know which would be a larger benefit… keeping it open to help my debt to credit… or closing it to improve my average credit age?
The only reason that I opened a new account (instead of using existing available credit) was because it gave me a no interest deal for 6 months. That way I could pay it off (as I planned to do) without having to accumulate any interest. And with my other credit cards at about 20% and 30% interest, each… this seemed like a better way to do it.
So what would you do? Leave it open? Close? Thoughts?
Can opening a new account and closing it a month later have any negative effect?
We tend to close these accounts, though I can certainly see the potential benefit of leaving them open.
From what I hear, you only really get a benefit of having an additional account open if you actually use that account a couple times a year.
From my experience and research, I would keep it open. You already burned an inquiry firstly. Second, the decent $3000 credit line is probably helping your utilization more than the new account is hurting your avg age. If this is the vendor I think it is, they will close the account after a while from non-activity, so it may be necessary to occasionally make a purchase and pay it off. You’re probably only talking +/- 10 points either way and the huge payments you’ve been making on the other credit accounts should eventually make up for that.