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Ask YOUNG MONEY: Does canceling my credit card look bad on my credit report?

By (past articles)

03/21/2007

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Ask YOUNG MONEY: Does canceling my credit card look bad on my credit report?

Dear YOUNG MONEY,

I am 20 years old and got my first credit card about a year ago, and have been responsible with it (always paying on time, never going over limit, etc) right now I have zero balance on it. The card I have is a Citi Credit Card and the APR is 19.99%.

Just recently I applied for a card through my work (I work for USPS) and got approved. Now I have a Chase Credit Card with a low APR of 9.99%.

I don't need two credit cards. I would prefer the Chase one with the lower APR (through my job). Is there any way I would be able to cancel the Citi on and just keep the Chase one? Or would that look bad on my credit report?

I haven't used the Chase one yet. Also, if that were the case, and I quit my job, would I still be able to use the card with its low APR even though I am no longer working at my job? I have zero balances on both right now. Thanks for your time.

Megan

Hi Megan,

Good questions.

I would advise you NOT to close the Citi Card. The length of time that you have accounts open helps boost your credit score. If you cancel the Citi Card, which is your right if you choose to do so, you lose that year of good, responsible use of the card.

I would urge you to call Citi and ask for a lower interest rate. They will see that you have the Chase account and may lower your interest to give you an incentive to use the card. If the high interest card has an annual fee, I would also ask that it be removed.

Citi may not lower the rate just yet since you are still young and have only been a customer for one year. However, if you keep the Citi account open but only use the Chase card, eventually, Citi may lower your rate to entice you to use their card.

Your Chase account is not tied to your employer. Citi has an agreement with USPS to market to employees. Many organizations do this and they may even get some compensation from Citi from each enrollment or application. I am not sure of that though. Should you leave USPS, your ability to use the account would not be affected.

You are doing well with these new accounts and they can help you build an even better credit score so keep using them wisely.

Keep in touch.

Mike "The DebtBuster" Schiano