Cancelling a Credit Card?

[coffeegrl]

Hi all. So I have a question about cancelling a credit card. I have a card that has a $99 annual fee attached to it, with a $300 credit limit. I just paid off the last little bit and the annual fee won't be charged again until September. I am considering cancelling the card, as I now have others with no annual fee attached to them. (I got this one a couple years ago, when I was rebuilding credit and ones with annual and/or monthly fees were my only option.)

Considering the fact that the annual fee is 1/3 the overall credit limit on the card, would it be wise to cancel it, or would that severely ding my credit report? (I realize there will be at least a small ding on the report; I just don't want it to drop by tons of points.)

I did some research online and it looks like this particular card company ONLY has cards with some type of annual fee attached to them, in various amounts. So I'm assuming they wouldn't just waive the fee, however, that would be my first question if I called them with the intent to cancel.

Thanks in advance for your advice.

[wvugurl26]

I would ask them to waive the fee. I had a card that was my first card. They switched to charging an annual fee. By this time I had other cards that paid cash back, etc. I called them and asked them why on Earth I would pay a fee for no rewards. They changed it to no fee and 1.5% cash back statement credit monthly. They also charge no foreign transaction fees so I like them when I'm traveling overseas.

[coffeegrl]

Hi wvugurl26 and thanks for the response. Yes, I did mention that I would ask them to waive the fee if I called with the intent to cancel the card.


However, here was my question that I was really wanting some thoughts on, assuming that the fee was not going to be waived: "Considering the fact that the annual fee is 1/3 the overall credit limit on the card, would it be wise to cancel it, or would that severely ding my credit report? (I realize there will be at least a small ding on the report; I just don't want it to drop by tons of points.)" (Pulled from my original post.)

This is a Milestone Card, issued by the Bank of Missouri. I do know the Bank of Missouri has other types of cards, but my research shows that all MILESTONE cards have an annual fee of some sort attached to them.

Thanks.

[billisonboard]

It should increase your credit rating to cancel a card with that type of financial disincentive (i.e. "finally she got smart enough to cancel the stupid thing!").  <- means I do not seriously mean it will increase it

[TheOtherMe]

When I wanted to cancel a card with a fee and low credit limit, I called my credit union.  They told me it was ridiculous to pay that fee for that credit line.  They said whatever ding I took to the credit score, which disappear quickly if I paid my other cards on time.  I did and it came up the 5 or 10 points it went down.

I would not pay $99 annual fee for a card with a $300 limit.

[sesfw]

The only time I would think about a credit rating is if I'm going to have a major purchase in the near future.  Otherwise I would cancel the card immediately and even with a small drop, it should go back up quickly.

Save your funds, you work to earn them.

Last CC I cancelled I walked into the office and told them I was cancelling.  The guy cancelled the account then handed the card back to me.  I handed it back to him, and stood there and watched while he put the card in the shredder.

[countrygirl2]

I just cancelled 2, Macys is gone so no incentive to keep it. And TJ Maxx I got for $40 off Xmas gifts or something.

They only give you $10 off every so often, my MasterCard is much better, cash back on it, can take out when I want.

I kept Sears, have had it for many a year, the Bank of America MasterCard, and Pennys a lot of dollars off at different

times, so that's it and those are enough. Oops we have a Lowes Business account card with money off too.  I don't carry

a balance on any, check Lowes every couple of weeks and pay it off to.

[coffeegrl]

Thank you for your responses! Contacting this company to cancel the card has been added to my to-do list for this week. I know paying $99 per year for a $300 credit limit is stupid. I guess I just wanted to make sure I wasn't overlooking some disaster that could happen because of it. :-)

[coffeegrl]

Update: I have two credit cards completely paid off! Woot woot!

[sesfw]

[resolution]

It sounds like that card has done it's job by getting you access to the no annual fee ones. I wouldn't hang on to one with such a high fee for a low credit limit.

I would just recommend after you close it to make sure you hang on to the other two to try to build some longevity to your credit history. 

[coffeegrl]

Yes, the other credit cards I have provide me with rewards of some sort. :-)  I'm just glad to finally be at a place in life where I can start really getting out of debt and saving again. I had a few rough years about a decade back, and digging out of a bad place seems to be a much slower process than getting into one.

[TheOtherMe]

Sadly that is true.  Ask how I know.  

[Deleted]

I just cancelled one, and I have impeccable credit (840s). I opened it for the incentive, and then I quit using it.

I would like to cancel more, but Discover let me freeze the two cards I have there. I want to wait and see the effect of closing one card.

I hate the idea of all these open lines that I don't use. I have to check every few weeks to make sure someone hasn't hacked them.

I love the incentives, but I hate the cards.

[chapeau]

This reminds me, I wonder what is going to happen to my semi-recently opened Bob-Ton card. I assume it will be closed, but I probably shouldn’t. There aren’t really any of the other stores in that family nearby, so I don’t want them to change it to one for another store. Adding that to tomorrow’s to-do list.

[coffeegrl]

And the card is cancelled! They didn't try very hard to keep me. I told them that unless they could waive the fee or move me to another card without any fee (or offer some kind of rewards), that I no longer needed the card. The guy asked if I would stay if he gave me an increase of $100 in the credit line and I said no thank you. He just said, "OK, I'll get this cancelled for you." I also requested a letter mailed to me confirming the closure of the account. It feels good to know I won't be paying that annual fee this year!!

[sesfw]

[lazysundays]

My credit score is 860. I am not afraid of messing the credit score by closing/opening cards. I will open a new card to pay off furniture over 18 months interest free, then close it. I open new store cards for the discount and then they close it from no activity. It’s more important that your total monthly % usage is low. I have all my cards set up to pay off in full each month. I recently paid $6000 for summer camp and another $4000 for air/hotel in one month. Then I was cautious to make an additional one time payment to keep % usage low.
Just close the credit card, have your score go down 10 points and be done with it. It will come back up.

[TheOtherMe]

I do not have the income to pay off  $6000 in one month so I can't do that.  I use the store 0% if possible or a balance transfer and I always pay those off on time.

[lazysundays]

It’s not about the income, it’s about saving for goals. As soon as summer camp 2018 was paid off in March 2018, I started putting aside $500/mo in April for March 2019* Credit cards should only be used if you already have the money, for convenience and for points/cashback. They are not the modern bank of mom.