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Why shouldn’t I cancel my oldest card?!

January 8, 2018

When it comes time to cancel a card because the annual fee is coming up or because you never use it anymore, you really should ask yourself if you should cancel it or just downgrade it. And most of the time you will want to just downgrade the card. But will downgrading the card affect your credit history or score? No. Will canceling the card? Usually. That is why it is always a great idea to downgrade the card vs canceling it. This will keep your credit score high and allow you to keep and apply for more cards. One caveat is that if you downgrade the card you may forfeit the sign up bonus that comes with that new downgraded card. 

 

So typically you will want to just downgrade the card to a no fee card, put a small monthly recurring charge like Netflix on it and set it to auto pay and leave it in a locked desk drawer. This card is now a free card that keeps your credit card utilization low and your credit history long. Which is what credit card and loan issuers use to determine your score, and the higher the score, the better cards you can get and the better interest rates on cards or loans. 

 

When you downgrade your number will stay the same, so you don’t have to worry about changing it on all your online shopping portals or linked accounts. Also it wont show up as a new card on your credit report so that will help with cards that have a limit in the future, like the Chase 5/24 which doesn’t let you have more than 5 card applications for any issuer in 24 months. 

 

So when you downgrade a card you keep the length the card was open on your credit report. Wanna know if you are able to downgrade the card? Just call or login and chat with a representative. Most of the time you need your card open for about a year, which is usually when the annual fee kicks in. So sometimes you can get a new card use it for a year then get around the annual fee by downgrading it right before the fee will kick in. 

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