Sometimes deciding when and if you should sign up for a credit card is sometimes the easy part.
Deciding when and if you should you cancel your credit card seems to be a more troubling question for most.
The simple answer is don’t do it until there is an actionable reason to cancel it.
When to cancel your credit card
Here are some sample actionable reasons:
- The annual fee is coming due. Remember, when calling to close the account, ask about a retention bonus, and see if they’ll waive the annual fee again or give you a bonus for keeping the card. If they do not offer any type of a retention bonus, see if you can downgrade your card to a no annual fee card.
- You must cancel an account in order to be approved for a new card. I’ve had this experience with Chase. If you have too many cards, they’ll ask you to close your oldest account in order to get a new approval.
- You’re getting into debt issues because you have credit problems.
Beyond these three reasons, you probably shouldn’t close an account. If a card doesn’t have an annual fee and you don’t plan to use it any more, just put it in a designated corner of your safe.
Should I cancel an old card before applying for a new one?
Don’t do anything with an a credit account before applying. Sometimes people think that if they have less cards they are more likely to get approved. However, your best approach is to apply, and then if you’re forced to close another account, do so at the request of the reconsideration agent over the phone.
You’ll have something to give up. If you cancel a card you wanted to keep and could have been approved anyway, you’ve gained nothing.
How should I track my cards so I don’t forget about canceling a card?
I use a simple Excel spreadsheet. I record the card applied for, the date I applied, the approval process (i.e. approved instantly, denied, or called reconsideration line), and the bonus I received.
From there, I set a reminder on my computer calendar for 10 months from the date of application. At the 10 month mark, I evaluate what my plans are for the account.
If you’re concerned that you might not meet the minimum spend, then you may also want to set a reminder each month to check up on your current spending.