Note: At the bottom of this article, I discuss some upcoming changes to the blog.
I came across an interesting article on CNBC today about closing credit cards. They offered a piece of advice that I don’t see often but is often correct.
Should You Close Old Credit Cards?
You’ve got that piece of plastic that you no longer use lying around because you just haven’t gotten around to calling the bank yet to get rid of it. But should you even do so?
The article mentions something that I’ve touched on before: Credit scores take into account both how much credit you have and the length of your credit history In fact, those two factors account for almost half of your score.
Of particular importance is your “utilization,” or the percent of your total credit that you have outstanding. So if you’ve spent $5,000 out of $100,000 available, your utilization is 5%. But let’s say you close half of your cards. You’ve still only spent $5,000, but your utilization is now 10%. The bank views that as more risky than someone who has only used 5% of their total credit, even though the absolute number is the same.
My Method for Tracking Cards
I don’t make it too difficult. If my card has no annual fee, I’ll never close it, since it keeps my total available credit (the denominator in the equation above). Annual fee with no other benefits, like a free hotel night? Forget it. It gets closed.
Upcoming Blog Changes
I’ve had a lot of fun writing this blog over the past several years. And now, I’ve got an opportunity to expand my reach. I’ve been approached by Anthony Curtis of Las Vegas Advisor and Michael Trager of Travelzork to build out the points and miles section of Anthony’s LVA site. It’s hard to get that kind of exposure, so I was happy to take them up on it.
So I’m happy to announce that we are rolling out Las Vegas Advisor Travel, aka “The Travel Game.” We’ll be writing about points and miles; travel and all kinds of other fun stuff. And while the existing site is all about Las Vegas, our portion will be global. In addition to checking out the site, you should also join the Facebook group, which will allow you to discuss the articles with other travelers.
Here on FFMiles101, I’m going to make a few changes. I’ll still post a few times a week, but the posts will be thematic, like the one above, rather than “event” driven, like the announcement of a promotion. I’ll also be providing links to The Travel Game, so you’ll still get to read event-driven pieces.
Thanks for reading and joining me in continuing this journey!
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And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!