How Canceling a Credit Card Affects Your FICO Score
Many times when people decide they need to simplify their finances, one of the first things they consider is closing one or more credit card accounts. If you have a wallet full of credit cards, and you have balances on more than one of them, it can be extremely difficult to keep track of all of the different monthly due dates and payments.If you have multiple credit cards and there are some you don't use, this poses a higher risk for fraud since there is a good chance you might not bother opening some credit card statements when they arrive. After all, what would you need to look at it if you know you haven't used the card, right? The truth is, if you aren't keeping a close eye on your credit card statements, you can become a victim of credit card or identity fraud that goes undetected for quite some time. Why Would You Want to Close a Credit Card Account?
There are three main reasons why someone would consider closing a credit card account. First, it can eliminate the temptation of spending more than you can afford by making it impossible to spend on credit. Second, people sometimes have a hard time keeping track of all of the different due dates associated with multiple credit card accounts and find it easier to downsize and keep just one or two credit cards. Third, some people opt to consolidate their debt with a balance transfer credit card and prefer not to keep the other credit cards open to make sure they don't continue spending more once the balances have been transferred to the new card.
Credit Cards and Credit Scores
Having fewer credit cards to keep track of can definitely simplify your financial situation and help you avoid late payments. There are a few things to keep in mind when closing credit card accounts, however, as your actions can have a negative impact on your FICO credit score.
Here are a two ways closing credit card accounts may lower your credit score:
: When you close credit card accounts, especially accounts that do not have a balance on them, you reduce the amount of available credit you have. Your "debt to available credit" ratio will suddenly increase even though you haven't spent any more money. Because your debt to available credit ratio ( also known as your credit utilization ratio : If you close one or more credit card accounts that happen to be your oldest sources of credit, you essentially reduce your credit history.
NerdWallet's Best Balance Transfer Credit Cards, Winter 2011 Edition
Balance transfers can be a great tool for people carrying a substantial amount of credit card debt. For example, if you have $3,000 on 3 cards, accruing interest at 15% or more, transferring it all to a card with 0% interest would end up saving you hundreds of dollars. It’s not all free money though – you have to be aware of the upfront fees (up to 5% of the transferred balance), as well as the interest rates that you’ll charged after the 0% promotion ends.
Based on these metrics, we’ve come up with a few of our favorite balance transfer cards to help you out:
Discover MoreDiscover More ranks at the top in terms of promotional period, with 0% APR on balance transfers for 24 months and on purchases for 6. The transfer fee is a hefty 5%, but the APR on purchases is a manageable 11.99% or higher after the first year. This card makes the list because, in addition to being a solid 0% balance transfer card, it also offers a decent rewards program. Similar to the Chase Freedom rewards program , the More pays 1% on all purchases and up to 5% on rotating bonus categories. Another perk, becoming more and more rare: no annual fee.
Citibank Platinum SelectCiti’s Platinum Select credit card also offers 18 months interest-free on balance transfers, as well as another uncommon interest-free perk: 0% on purchases for the first 18 months. So if you just need a little breathing room to pay off your debt, this card is ideal. There’s no annual fee, and the variable APR starts out at a decent 11.99%. The transfer fee is a pretty standard 3% of your balance. This is a good choice if you’re planning on paying off your debt fairly quickly, but unlike the More, the Citi card doesn’t offer very much in terms of rewards, or anything at all.
Simmons First Visa PlatinumThe Simmons First Visa Platinum stands out thanks to its 0% balance transfer fee. That said, it doesn’t have an introductory offer or rewards. The minimum APR is a fantastic 7.25%, though, and it’s a great card to have. If you’ve got long-term debt that is likely to outlast the intro period of other cards, Simmons’ low APR and no annual fee make this a good deal. The catch: you need stellar credit to qualify.
Discover MotivaBalance transfer deals are typically only available for those with great credit. However, it is possible to save yourself on interest charges if you have less than stellar credit. The Discover Motiva is available in a number of different varieties, depending on your credit profile. For example, you can get 3.99% for 15 months on balance transfers, with a transfer fee of 3%, and earn a little bit in rewards (0.25% cash back for the first $3,000, then 1% after that). This card also carries no annual fee, and it rewards good behavior by refunding your next month’s interest charges when you pay on time 6 months in a row.
0% APR Balance Transfer Credit Cards
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0% Balance Transfer Credit Cards
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Best Balance Transfer Credit Cards
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0% APR Balance Transfer Credit Card Offers
0% Balance Transfer Offers (Updated Daily): 0% for 24 months from Citi MasterCard, 0% for 18 months from Discover, and 0% for 12 months + $100 from Chase Visa.