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I have a Capital One credit card that I got in college with a limit of $1,300 and a $39 annual fee. They've never raised the limit for me over the years even though my credit score is north of 700. I have a balance of $0 and I haven't used the card in years.

I wanted to close that card and get a different card, something that gets miles/points and has a decent limit. Most of my other cards have limits that are above $10,000.

I did a search here and most people said to just let the unused cards continue on because of the debt-to-limit ratio portion of the credit score, but the posts didn't reference yearly fees and it didn't take into account that a new card will have a better ratio with a higher limit.

With the yearly fee in mind I'm inclined to cancel, but are there any measurable negative effects to asking for a credit card closure?

Thanks

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    Short answer: Yes, it will. But it'll recover fast. If you're north of 700, it doesn't matter. Credit point's aren't pokemon. You don't have to get them all. – Chris Cudmore Mar 20 '13 at 19:51
  • You should request a credit limit increase if you want one, ditching a card because it wasn't done for you is silly. – Matthew Read May 5 '15 at 19:54
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Several events will always result in a reduction of your score, including:

  • Reducing the average age of your credit cards (would result from cancelling this card)
  • Reducing your available credit as measured by debt-to-credit ratio (as you mentioned)
  • Opening a new credit account

These will show up in the short term, but I don't think it's worth $40 per year in perpetuity to avoid this. These aren't serious "black marks" in the same category as missing payments, carrying too much debt, or foreclosures/evictions, etc. These effects are designed to signal issuers when someone acquires a large amount of credit in a very short period of time, which may indicate a greater risk.

If your credit is good and you are using your other cards responsibly, closing the card (given the annual fee) would not cause me great concern if it were me.

Since you are so much better of a risk than you likely were in college, you can also call Capital One, ask to speak with a supervisor, and ask them to drop the fee and increase your credit limit. They should be able to easily verify that you meet the requirements for other types of preferred cards they offer, and they should be willing to offer you improved terms rather than losing your business. It is very possible they simply haven't re-evaluated your risk since you initially applied.

Also, remember that these types of effects determine only a portion of your overall score. Activity is also a major component. Rather than leaving an unused card open for history and debt-to-limit purposes only, I would also recommend having some minimum level of activity, such as an automatic bill payment, on each card you carry. The effect of using your cards over time will have a significant positive effect on your score.

Best of luck!

  • Thanks for the information. I have a miles card with American that I have tied to several auto payments and I pay it off in full every month. I only carry a balance on one card and that's a 0% interest (balance transfer promo). I've contacted Capital One several times over the years but they've never budged on the credit limit. I decided to keep the card for emergencies but I have others now that I'm older. A friend of mine has the same problem with Capital One. I'll apply for the new card and see what happens. My Capital One fee is due in April so I have some time. – Moi Mar 20 '13 at 0:08
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I once called Amex to cancel a card with an annual fee. Instead, they were able to give me a different card with no fee. They were happy to do it. Of course, Amex has fantastic customer service, while Capital One is not known for it. But, its worth a five minute call, and you will retain your good score.

  • Yah, this has worked for me too. Sorry to hear that Cap One doesn't appear to value your business Moi. – JAGAnalyst Mar 20 '13 at 14:51

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