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Question By
Hoseki

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85 People Helped
Qualified for better card without annual fee. Should I close old one with annual fee?
I am building up my credit from a bankruptcy that occurred two years ago. Earlier this year, I attempted to apply for the best card available for my credit at the time. It has an annual fee of 49.00 a year. I have done well with paying off my balance as soon as purchases post, result in a constant 0 balance and a nice raise in my credit score. Tonight, I applied for a new card without an annual fee and much better rewards. I was approved with a CL nearly triple the one I had been approved of earlier this year. The credit simulator says that my score would go down by one point if I closed an old account and opened a new one.

Has anyone had to make this decision and if so, what did you do? I don't want to keep paying a fee every year if there's a possibly that its only going to cost me one point.

Thanks!

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close old acct.

Helpful to 4 out of 4 people

Do what huggybear said.

I had to rebuild and my opinion is that as you rebuild, take the steps to the better cards.  There may be some small hits on your score from the longevity portion of the scores, but I see this as a growing pain that is unavoidable, and ultimately (within less than a year) your score will be higher than if you hung onto the sub-prime fee based cards.  Those cards look good on the credit report when you are rebuilding, but once you dont need them, they are holding you back.  I dumped my last one recently.  According to most of the chatter on here, my score should have gone down due to the utilization and length of history math.  But the reality is that my score jumped up exactly eight points.  The simulator on here said that would happen and that is exactly what happened.  That surprised even me, and I am old and not much surprises me anymore.  hahaha.  This tells me there is more going on under the hood with all the credit score computation than the main five groups we hear about. 

Staying with the fee based sub-prime lender will hurt you more over time.  I say dump it if you have an opportunity to improve yourself.

Just my opinion

Good Luck

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Reply by
Hoseki

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Helpful to 2 out of 2 people

Thanks for posting your real world experience. The way credit scores increase and decrease have continued to surprise me as well. Things people told me not to do ended up being the best thing while vise versa is sometimes true. So weird. 

I am glad your credit went up. 

As I told the previous person, I called them and they waved the fee for this year. So, I'm going to stay with them until next year. If they won't upgrade the account to a non-annual fee one, then I am going to close it way before the fee kicks in. 

Thanks again!

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1 Person Helped

Close Old Account

Helpful to 1 out of 1 people

Close the old account and open the new. The old account isn't really old and won't make much difference, if any, in your credit score. Yes, I closed an account with an annual fee that I had for 3 years and it had no effect on my credit score. I asked to have the fee waved since I paid my balance in full each month and was never late... but they refused. Don't feel guilty about the bankruptcy and allow yourself to be taken advantage of by any credit card company. Ask them to wave the fee or say goodbye. Things happen. Learn and grow from them...good luck.

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Reply by
Hoseki

11 Contributions
85 People Helped
Helpful to 1 out of 1 people

 I took your advice and called the company. They weren't willing to get rid of the fee because "it was part of the terms I signed up for." However, the rep was really nice and refunded the fee for this year since I have done well with my account. I will have to pay one next year, though. So, I will keep this one alive until next year and repeat the call. If they are unwilling to upgrade my account, then I will close it way before the fee is due.

Thanks for your advice.

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