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I just cancelled a credit card, it did this to my credit score.
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43 comments
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Follow up video idea, “What maxing out all my credit cards did to my credit score”.
Sorry this happened to you Ben. Still rocking 38 credit cards, 2 years is my longest account age
Re: cancelling card & effect on utilization . . . if you can, transfer some (if not all) of the credit limit from the card you are cancelling to another card.
Still kinda confused as to why you’d cancel a no annual fee credit card, and a freedom card to boot.. what’s the advantage other than slightly increasing the average age of accounts?
2:25 Imagining if I was new to the channel, and I'm like, who is this "Credit Shifu" Ben Hedges is taking about? 😅😅😁😁
Did your have a strategy behind making this decision? Did you do it just for this video?
Wondering why you closed your Freedom credit card since it costs nothing to keep? Unless you wanted to shift the available credit line to another card for more spending available on another card. My wife and I each have the Freedom and Freedom Flex cards (4 total Freedom cards between us) giving us $6,000 of available quarterly spend at the 5 points per dollar rewards. Depending on the category, we will max out these point earnings by "prepaying" for items.
For example, this quarter is Walmart, so before the quarter is up I will max out the $1,500 per card by buying Walmart gift cards to use throughout the year. We spend more than $6,000 per year at Walmart (including groceries). It is important to buy gift cards in store as gift cards are often deemed ineligible for rewards. Online purchases are likely to trigger the purchase as a gift card purchase while in store purchases for me has not. Last year I used this strategy when Rakuten also was offering 5% back for in store Walmart purchases. So I received 5 UR points and 5 MR point per dollar for about $5,000 (I had already spent about $1,000 that quarter at Walmart) of Walmart spend that I was going to do anyway. At a 2 cpp valuation that's 20% back! I'm waiting this year to purchase the gift cards to see if Rakuten does a similar Walmart in store purchase promotion to the one they did last year. We used up the $5,000 of Walmart gift cards we purchased in December last year in July of this year. If you can afford to prepay for expenses like that I think it is worth it.
A couple things to note is that $500 is the most you can put on a gift card, so you'll have to buy up to 3 gift cards for each Freedom card you have. Then the easiest thing is to load those gift cards into Walmart pay and it is really easy to use up that balance. My wife and I (and my kids who do some shopping for us) are all logged into the same Walmart account so we can all use the gift card balances that are in Walmart pay. Walmart pay allows up to 5 gift cards to be loaded at a time. Any returns will have to go back onto a new gift card (they can't add credit to a gift card you already have), so I like to leave a gift card spot or 2 open in Walmart pay for returns (I immediately put the new gift card I get from any return into Walmart Pay) and then always use the gift card that has the lowest balance. You can also use multiple gift cards for any purchase if the purchase is larger than the gift card balance. Hope this helps 🙂
do no annual fee cards automatically close the cards ever if you arent using them ?
好易勃😁
Hey,Ben! How bout' Rumble?RUM
Synchrony just closed 2 of my cards for inactivity lol My Lowes and Newegg cards which I had opened up to make some big purchases. Paid the stuff off and didn't use them for a year. Got emails/letters saying they were closing them due to inactivity and my score dropped like 50 points lol
It feels good to learn about something else other than maxrewards 😁
What microphone are you using Ben? The sound quality is outstanding! )
I have a crappy credit one card with 500 limit but I have total of 35k u think it I cancel this no good card with an annual fee I opened it this year and my score is in high 7’s just got my credit right this year
Out of curiosity, why close the card if it has no annual fee? I get not being able to spend. But couldn’t you just sock drawer it?
I like how the Smart Investment app example has the banks and loans labeled as Gringott's. The Harry Potter bank
Great video, thanks for the info 👍
I just closed a credit card with a 500.00 dollar amount. But I applied for a Chase card and got a 14 thousand dollar limit
I just watched your “credit card collection” video and I was wondering if you can max out 5% categories on THREE freedom cards. It seemed very difficult task, and here you have it! Good decision on cancelling it.
If you have multiple cards with the same bank you can usually move your credit around. Before you close a card move the credit to another card that way your utilization won't change or it will be very little because cards usually have a Minimum like $500 so you can move it all but that amount before you close it
3:26 "newest" bruh you mean the oldest
I've been wanting to close my Credit one card for a while because it's so crappy but it was my first card to help rebuild my credit. It's about 15 years old and my credit varies in mid to upper 700. Ill have to do it one day because I hate the annual fee
thanks ben! big sigh of relief cause this blockfi card has got to go!
Hey do you have any information on how to obtain the white card ?
At some point I would think that it's conceivable that it could actually be advantageous to close an account, because I'd imagine that there may be a point when you have so many cards or so much credit that you begin to get denied for new cards or get really low credit limits if you get approved. Exactly where that is I'm unsure, but it would seem to me that there's a limit somewhere to how much credits banks collectively want to extend to a given borrower. At that point, it may actually be better to close an old card if you want a new one, I'd imagine.
Question. If I downgrade a CSP to say, Freedom Flex, would there be a reduction in the credit limit? Or does it stay the same?
Why cancel if theres no annual fee?
Thank you so much ..for this info…I have fixed my credit by watching video like yours ….Thanks, Again.
At a certain point, the difference made is negligible
I really wanna close my useless BOA travel card i got talked into when i was younger. But its over 6 years old and all my other cards are in the younger phase of like a year and half. But i guess my age is still in the "poor" range (under 4 years i think) no matter. But i still manage to have an 800 score.
I closed 5 in the last 6 months and i changed nothing on my score
My first card was a secured card that was a low limit, 300. My score is 700 now and i got better cards. Should I close that secured card?
My uncle who is broke has a 80pt higher credit score than me who is high net worth. Means nothing. Your liquid assets count for loans etc. Credit is for sorry poor people.
To low or zero utilization will affect your score as well. I was like you and kept mine under 5% utilization. I would always hover around 780-805. I wanted once before I died to see at least one of my scores at 850. It was actually a mistake that made that happen. I forgot to pay a bal. off on my Cap One before my statement end date. That put me at a little over 20%. That's when my scores really started to stay in that 820+ range. Seems like 20%-25% utilization is the sweet spot for me.
Ughhh I Really want to close my Target credit card because it has a $700 limit they will not raise, but it’s my oldest card at about 7 years old. I do use it for the discount, but I also am a little pissed that 7 years of on time payments hasn’t gotten them to budge.
Why close the card if there's no annual fee?
And with a one with no use?
I never considered the fact that closing your newest account could raise your average age of accounts. I guess that only makes sense! Of course, it seems that's only the case with specific credit scoring models, but still cool to see how little your score was affected overall. Thanks for sharing Ben!
Thank You. This very helpful.
I had 30 cards I closed 23 cards in one day. My score never went below 820. But I owe zero on my cards. The age of my accounts went from 30 years to 1 year and 9 months. Still no major change. You can close them.
Ha he said Credit Shifu
I remember a few months ago I did a large Amex transaction and it was about a week before my monthly credit score was updated. Wouldn't you know it my FICO score dropped 26 points. Needless to say I made sure the balance was paid before the next FICO score update and yes it went back up 26 points on the next cycle. You'll see a temporary decrease but if you pay off the transaction or significantly decrease the balance your credit score will bounce back.