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You've been on a mission to clean up your finances and you've now reached a point where you have some credit cards with zero balances that you no longer want to use. What's better for your credit score: keeping them open or chopping them up and shutting them down? Like many things in life, it all depends. Here are the pros and cons of keeping zero balance credit card accounts open or closing them down.
Keeping your credit card account may prevent any negative effects to your credit utilization ratio - which is a portion of your credit score that accounts for all the accounts you have open against the amount of debt you currently have accumulated.
Keeping your zero balance credit card open could increase the average age of your credit card accounts, which is influential when calculating your VantageScore credit score. If you close your account, then you're going to look like you've only just started to get access to credit.
Keeping an older credit card would show lenders that you are capable of managing credit over a number of years. Do you have a low interest rate and perks on the card you're considering closing? It might offer cash back rewards, for instance, which you can take advantage of for a big purchase. Or it might have an exceptionally low interest rate that becomes unavailable if you apply for the same card in the future.
Only you can know: will you be tempted to use that zero balance card again if you don't close the account? If you are considering closing a credit card, this gives you an opportunity to close the credit card account with a highest interest rate.
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Skip to content. Advertiser Disclosure. Richard Kerr. In the reward space, this has led to two strategies: Manufactured spending, or MS for short not to be confused with minimum spend Brokering Manufactured spending is putting expenses on a credit card, liquidating the purchase sometimes with a minimal cost and then paying off the card, leaving you with only rewards points.
Bottom line Many of you are probably left wondering if this will impact you and will naturally want to ask about your specific situation: Will I be okay moving forward? Sign up for our daily newsletter. Sign up. I would like to subscribe to The Points Guy newsletters and special email promotions. The Points Guy will not sell your email. Plus, earn 10x points on eligible purchases on the card at restaurants worldwide and from purchases at Shop Small locations in the U.
Terms Apply. See rates and fees is a great cash back credit card for those who spend regularly at U. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Credit card welcome bonuses are tempting to earn. We all need to spend money at some point, and getting rewarded for those expenses is hard to say no to. But it is best to avoid applying for too many cards too quickly. Business cards from other issuers may count toward your tally.
Applicants who are only above five new cards in the past 24 months because they are an authorized user on one or more cards may call Chase and ask those cards to be excluded from consideration. This request is sometimes, but not always, granted. For business cards only, applicants may visit a branch location and ask a business relationship manager to file a paper application.
The most popular card issuers, including American Express, Capital One and Citi, all have their own application rules to discourage churning. Becky Pokora is an avid traveler with a particular love for the outdoors. She's always looking for new ways to make travel easier, more memorable, and more affordable.
Brett Holzhauer is a former banking and personal finance reporter for Forbes Advisor. Previously, he was reporting at ValuePenguin and FinanceBuzz, and has been featured in numerous publications. An alum of the Walter Cronkite School of Journalism at Arizona State, when he is not reporting, Brett is likely scuba diving, golfing or watching college football.
She's a credit card enthusiast and digital nomad who has leveraged credit cards to travel around the world for next to nothing, often in style. Prior to working for Forbes, she contributed to other leading publications in the credit cards and rewards space. She would like to visit every country and try as many different local culinary specialties as possible. Select Region. United States. United Kingdom. Contributor, Forbes Advisor Staff, Editor.
Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. Other Credit Issuers Have Rules, Too To prevent similar instances from consumers, other credit card issuers have implemented their own application rules. You can be approved for a Bank of America credit card if you have been approved for fewer than the following from any bank: 2 new cards in a day period 3 new cards in a month period 4 new cards in a month period Capital One: Capital One application rules are extremely simple.
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