Which Credit Cards Should I Close?

A while ago, I cancelled my Chase credit card. I had had it for two or three years, but I was tired of dealing with it. Besides, I had other credit cards. So, how did I decide that the Chase card was the one to go? By analyzing which credit cards were of most benefit to me.

When used properly, credit cards can be a great tool. They help your FICO score, which in turn can help you get better interest rates on other loans, and can even affect whether or not you get a job. Additionally, credit card rewards programs can offer you many advantages. When you use credit cards responsibly, paying off the balance every month, then you can score free stuff. But if you have too many, problems can arise.

Too many credit cards

Too many credit cards, especially too many that have been recently acquired, can in turn hurt your credit score. You need to strike a delicate balance. When you look in your wallet and realize that you have four or five, or even six or more, credit cards, it's time to cut back. Here's how to decide which credit cards should go:

Department store cards. This is the easiest. Cancel them all. These cards often have higher interest rates, and once you "save 10%" by signing up, all rewards are gone. But don't sign up just to save the 10%. This can adversely affect your score. If you use the right credit cards, you can get at least that same value -- and probably more -- anyway.

Card without good rewards programs. Your credit cards should have some benefit to you. If you have a card that doesn't have a good rewards program, get rid of it. I have a miles card for travel and Upromise card that will help my son pay for college. These work for me. The only exception is a low fixed-rate credit card I got 6 years ago.

High interest rate cards. Call the credit card company if you are in good standing and request a rate reduction. If you don't get one, cancel. There is no reason why someone with good credit should ever pay more than 12.99% on a credit card.

Finally, consider how long you have had the credit card. My only non-rewards card is a credit card I got 6 years ago on a special deal. It has a low fixed rate, and I've had it for a long time. The longer your accounts have been open, the better that looks on your credit score. If you have had a card for more than three years, and your other cards are relatively new, go ahead and keep the old card (buy something and pay it off every two or three months) until your better cards catch up with that length of time.

Also, realize that your credit score will go down slightly when you cancel a card. However, it doesn't go down much if you request the cancellation, and after a couple of months of regular, on time payments on the cards you have left, your credit score will back where it should be.