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Nov
17
2009
We have a credit card (Chase) that we have not used in years I want to close it but have heard it can hurt your credit rating but I am also worried they will somehow strt charging annual fee or something that I will end up paying. what should I do? and how?
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Answer #1
Eisde,
The key to this answer lies in how much debt you have on other credit cards or lines of credit. Part of your credit rating is based on the ratio of your debt to available credit. For example, if your total available credit on all of your lines of credit is $20000 and you have $5000 in debt charged against them, the debt to available credit ratio is 25%. A higher ratio can adversely effect your credit rating.
If you are carrying large balances canceling one of those lines of credit can significantly raise the debt to credit ratio and lower your credit rating. If you take $5000 away for the available credit in the example above making it $15000, the debt to available credit ratio jumps to 33%.
If on the other hand you have no or very little debt charged against your lines of credit, canceling one card will have very little effect on the debt to credit ratio.
If canceling the Chase card will significantly raise your debt to credit ratio, then it would probably be better to keep the card. If you have very little debt, canceling your Chase card will have little or no effect on your credit rating.
Canceling a card just involves calling the bank.
I hope this helps
Gardener44