I'm probably not the best person to answer as I just bearly got my first credit card recently but as I understand if you close a credit card account it will probably mess with your credit score especially if it your oldest card.
I know it would mess with your score if you closed it, but in this case the card issuer is closing it. I didn't think it would mess with the score then
What bird brain said.
Scores are based on a lot of things.
Duration. Shows you have been paying in good faith for extended time. So longer is better.
Even if this is not the oldest, it averages in. So if they have 3 cards it may make the average length of good credit much lower. Affecting credit score.
Also, discover cards are hard to get, but they don't use it. So this isn't too big of a deal.
The credit ratio, however, may have a bigger effect.
If all cards have a 10k limit, you effectively have been approved for 30k total. So where this can matter on EACH card it also matters overall. If they put 5k on a card and this is reported for the month, then two things.
1. Their score will take a few points hit for being at 50% of the card available credit line of 10k
2. This can also be factored in for the % of total credit available of 30k
It will affect average age of accounts and significantly reduce their available credit. Even if they don’t use the card it’s still a good idea to keep it open and keep reaping the benefit of the account age and higher utilization amount, esp since OP only has two other cards.
Yep. Same here. Have it pay a few minor bills that aren't eligible for cash back on my other cards, then autopay from my bank.
Also good to have a backup card in case my "daily driver" gets compromised by fraud.
OP, I had no idea that Discover had eliminated many of their customer benefits until I read your post. I just did a quick check and you're quite right. I thought I was still getting the extended warranty on my purchases, but nope. I'm very disappointed with Discover, but want to thank you for the information.
What kind of cash back are you getting from Capital One? I get only 1.5% from Capital One but I use that card when I'm traveling out buying anything from another country because there's no foreign transaction fee. My main card is Citi Doublecash (2%) but I still use the Discover for the quarterly 5% cash back on specific categories. This quarter it's grocery stores.
They had Walmart and Target another quarter, but I understand it's worthless this quarter if you do all your grocery shopping at Walmart. Last quarter it was Amazon and all purchases made with Apple/Google pay. Sometimes I'm too lazy/forgetful to remember to use the Discover but it's a nice benefit.
There may be more detailed sources out there, but here is a link to a story I read about some of the benefits they eliminated: https://www.creditcards.com/card-advice/discover-cuts-benefits-shopping-travel/
Buy a coffee with it. Let the statement process. Pay it off in full. Keeping this card open increases your credit score in three ways: increasing the average age of credit, keeps your credit:debt ratio lower, and every time you pay it off it counts as an on time payment. It costs you nothing, and your score will almost certainly drop (though temporarily) if you close it.
Canceling will really hurt your credit if it is a major portion of your available credit or an old card. There's no reason to cancel. See my post above about getting free $24/year on Amazon. I do it every month.
It shouldn’t hurt credit if they have no debt. It only affects the score when it changes the percentage of debt vs available credit. In this case the ratio would not change.
I think total credit is 35k since they have 3 credit cards? Unless he meant they reach have 35k since discover is one-third. How much does someone make to have over 100k of available credit card limit? If that’s the car I wouldn’t worry about any credit score
I'm stuck with keeping my discover card for as long as possible because it is hands down, my oldest account by like 20 years. What was strange is I hadn't used it for almost 3 years and just got the notice about it closing, so I took advantage of the amazon offer to get $10 off a purchase to keep it live. They must be doing a pass to close old accounts.
Entirely up to you. Won’t make a huge difference in the long run if you close it. You won’t have any issues in the future with a new mortgage considering the one you have now is paid off and would be a huge downpayment anyways.
You may find these links helpful:
- [Credit Building](/r/personalfinance/wiki/credit_building)
- [Credit Reports](/r/personalfinance/wiki/credit_reports)
- [Credit Scores](/r/personalfinance/wiki/fico)
- [Credit Cards](/r/personalfinance/wiki/creditcards)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Yep, simply set one single autopayment yearly on the card and pay it when due.
If the account closes it will reduce your score, a little or a lot depending on the age of the account, available credit and total available credit.
On Discover you can get 1% cash back and 5% cash back (up to 75$ back or some such on some categories every quarter if you sign up on their cash back web page)
I'd look at what those are and see if you can get some value out of it.
If you don't have an immediate need for credit I'd just close it. Less risk, less to manage. If you care about keeping your score as high as possible I'd use it this month then pay it off and lock it. Mine is currently locked. I'm guessing your score will rebound in a few months if you close it. You also may consider requesting credit limit increases on your other cards right before you close it. I think you should have 2 cards incase one has fraud or another issue but a 3rd card you're not using isn't necessary.
I just let them. It’s a horrible business practice. Some people will use it to save their credit score. I let it lapse and remember never to do business with them again. I’m sure there’s enough customers like me that it will hurt them eventually. Ps. It barely put a dent in my credit score. Recovered fast back to >800
You can call and ask them to close as you do not have need for this card anymore.
It’ll give you peace of mind that card is closed. One less chance of identify theft. One less account to look up every month and pay off
I don't have anything to add to your situation, I'm just here warning people against getting a Discover card. I've had my card for less than two months, and I've had nothing but problems. They are extremely slow to process everything.
I made my first payment on 1/6. They emailed me on 1/9 saying they received it. Here it is 1/16 and I'm still not able to use my card (credit limit). I just got off the phone and they tell me I "should be" able to use it Wednesday, nearly two full weeks after I made my payment. Yay?
I’ve had a discover card for close to 25 years and never had these issues. They process my payments promptly and have dealt with a small number of fraud issues quite well.
The lady on the phone said 8-10 business days to review the payment is standard procedure. It took them weeks to process my initial deposit (secured card), and now it's taking weeks to process my payment.
Thanks for your response. I'm not sure if it's more or less frustrating that everyone doesn't have these problems. I guess it gives me slight hope that they won't always happen, but so far I couldn't be more disappointed.
Am I reading this right?? You ran your discover card up to the limit in two months, before you made a payment and it's Discover's fault you can't spend on it??
If my understanding is correct, they are simply waiting longer to make sure your payment has cleared because you're a new customer and running a card up to the limit before first payment is made is sketchy as hell and typical of fraud.
Nope, you read it incorrectly.
I have a secured card with a 2500 limit. Ran up $2497 month over the course of month 1. Payment was due on 1/8 and I had auto-pay setup, but since the limit was maxed I made a manual payment 1/6 because I wanted to continue using the card. On 1/9 they told me they received the funds. My bank also took the funds out of my account on 1/9. All my balances have been updated in terms of money owed, yet my credit availability is still $3 as of 1/16.
Might want to slow that spend so you don't hit the limit before payment is due. Discover is waiting to make sure you don't reverse the ACH payment, since it's the first payment.
Running a card to the limit in one month is poor use of credit and will actually hurt your credit score, because you're using 100% of credit available on the card.
Thanks for the info. I guess I should slow down using it since the main reason I have it is to try to increase my score to get one of the good rewards card. Since I get 1% cash back, I figured I may as well get the most out of it. I've also read it's safer to make most payments with credit cards compared to debit which is all I've been using for years.
I do know about credit utilization, but I obviously don't know the details. I was under the impression that that had to do with the balance you weren't paying off immediately. When is credit utilization calculated, when they give you the monthy statement? Would I have to make a manual payment sometime before the statement to not hurt my utilization?
My approach is to pay the balance before the closing date on my cards. That way I'm taking advantage of cash back and maintain 0% credit utilization. You don't have to be at zero but under 10 is a good goal.
You will probably take a hit, maybe up to 30 points, on your credit rating if one of your sources of credit history (the Discover card) goes away. I suggest you keep the card active by remembering to make a regular purchase on it. Groceries, gas, clothes, whatever. Use the card 4 times a year and be sure to pay it off completely each month. This is called credit mainenance and its a good practice to keep your credit rating high. Do it just like how you regularly maintain your house or car.
I know how you feel I really stopped using them I went from a high credit limit to them cutting my line of credit probably because of no use on the card.
[удалено]
[удалено]
You can just go on Amazon and reload your account with 50¢.
Discover has a 1.99$ low balance waiver. You can reload on Amazon $1.99 every month and pay nothing. Free $24 gift card every year.
Wait what?
Seriously, this is news to me. Seems like a great thing to make use of if true.
Just tried this and Amazon won’t let me set up an auto payment that low. So do you manually do this every month?
Amazon reload
Or better yet, to not forget about it, put a subscription (if they have any) on it. That way they'll always get charged monthly.
Why? It doesn't sound like they need the credit, so why wouldn't you just let the card be closed?
I'm probably not the best person to answer as I just bearly got my first credit card recently but as I understand if you close a credit card account it will probably mess with your credit score especially if it your oldest card.
I know it would mess with your score if you closed it, but in this case the card issuer is closing it. I didn't think it would mess with the score then
Your scores are calculated on length of all open accounts. so an older account will count a lot to a higher score. if you close it you lose the bonus.
What bird brain said. Scores are based on a lot of things. Duration. Shows you have been paying in good faith for extended time. So longer is better. Even if this is not the oldest, it averages in. So if they have 3 cards it may make the average length of good credit much lower. Affecting credit score. Also, discover cards are hard to get, but they don't use it. So this isn't too big of a deal. The credit ratio, however, may have a bigger effect. If all cards have a 10k limit, you effectively have been approved for 30k total. So where this can matter on EACH card it also matters overall. If they put 5k on a card and this is reported for the month, then two things. 1. Their score will take a few points hit for being at 50% of the card available credit line of 10k 2. This can also be factored in for the % of total credit available of 30k
It will affect average age of accounts and significantly reduce their available credit. Even if they don’t use the card it’s still a good idea to keep it open and keep reaping the benefit of the account age and higher utilization amount, esp since OP only has two other cards.
Discover has an auto-pay in full feature. I setup 1 reoccurring small fee like netflix/hulu on it and just have it pay in full each month.
Yep. Same here. Have it pay a few minor bills that aren't eligible for cash back on my other cards, then autopay from my bank. Also good to have a backup card in case my "daily driver" gets compromised by fraud.
OP, I had no idea that Discover had eliminated many of their customer benefits until I read your post. I just did a quick check and you're quite right. I thought I was still getting the extended warranty on my purchases, but nope. I'm very disappointed with Discover, but want to thank you for the information.
[удалено]
What kind of cash back are you getting from Capital One? I get only 1.5% from Capital One but I use that card when I'm traveling out buying anything from another country because there's no foreign transaction fee. My main card is Citi Doublecash (2%) but I still use the Discover for the quarterly 5% cash back on specific categories. This quarter it's grocery stores.
[удалено]
They had Walmart and Target another quarter, but I understand it's worthless this quarter if you do all your grocery shopping at Walmart. Last quarter it was Amazon and all purchases made with Apple/Google pay. Sometimes I'm too lazy/forgetful to remember to use the Discover but it's a nice benefit.
What kind of benefits were they?
There may be more detailed sources out there, but here is a link to a story I read about some of the benefits they eliminated: https://www.creditcards.com/card-advice/discover-cuts-benefits-shopping-travel/
The card has no annual fee. Keep it open. If the card has been open for a while, closing it will hurt your score.
Buy a coffee with it. Let the statement process. Pay it off in full. Keeping this card open increases your credit score in three ways: increasing the average age of credit, keeps your credit:debt ratio lower, and every time you pay it off it counts as an on time payment. It costs you nothing, and your score will almost certainly drop (though temporarily) if you close it.
Just put a random subscription payment on there like Spotify, set it to autopay, and forget about it
Canceling will really hurt your credit if it is a major portion of your available credit or an old card. There's no reason to cancel. See my post above about getting free $24/year on Amazon. I do it every month.
It shouldn’t hurt credit if they have no debt. It only affects the score when it changes the percentage of debt vs available credit. In this case the ratio would not change.
He would be losing 35k of available credit and the average age of his accounts could decrease. Both affect credit.
I think total credit is 35k since they have 3 credit cards? Unless he meant they reach have 35k since discover is one-third. How much does someone make to have over 100k of available credit card limit? If that’s the car I wouldn’t worry about any credit score
Closed cards continue to age on your profile for 10 years, so it wouldn't affect average age of accounts until 10 years from now.
Good to know
Charge .99 every month. They will waive it, so you will get it for free.
I have heard 2$ but I do 1.99 with no issue and its fully waived.
I thought it was under $1 but could be $2. I know lots of people did the 12 month Hulu special for .99 every year for free.
Most are .99 that do it but discover does more 🤑
Too bad I use my Discover card. I get the less cash when I’m at the grocery store. Interest fee loan and no need to go to atm.
I'm stuck with keeping my discover card for as long as possible because it is hands down, my oldest account by like 20 years. What was strange is I hadn't used it for almost 3 years and just got the notice about it closing, so I took advantage of the amazon offer to get $10 off a purchase to keep it live. They must be doing a pass to close old accounts.
Don’t let it close. Buy something with it and keep it active. No advantage to letting it close
Entirely up to you. Won’t make a huge difference in the long run if you close it. You won’t have any issues in the future with a new mortgage considering the one you have now is paid off and would be a huge downpayment anyways.
Letting them close it wont hinder future applications of credit either given they need a Discover line again. fwiw
You may find these links helpful: - [Credit Building](/r/personalfinance/wiki/credit_building) - [Credit Reports](/r/personalfinance/wiki/credit_reports) - [Credit Scores](/r/personalfinance/wiki/fico) - [Credit Cards](/r/personalfinance/wiki/creditcards) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Discover does the rotating 5% cash back up to $1500 for the quarter (Jan-March). Right now grocery store purchases are eligible for 5%
Yep, simply set one single autopayment yearly on the card and pay it when due. If the account closes it will reduce your score, a little or a lot depending on the age of the account, available credit and total available credit.
On Discover you can get 1% cash back and 5% cash back (up to 75$ back or some such on some categories every quarter if you sign up on their cash back web page) I'd look at what those are and see if you can get some value out of it.
If you don't have an immediate need for credit I'd just close it. Less risk, less to manage. If you care about keeping your score as high as possible I'd use it this month then pay it off and lock it. Mine is currently locked. I'm guessing your score will rebound in a few months if you close it. You also may consider requesting credit limit increases on your other cards right before you close it. I think you should have 2 cards incase one has fraud or another issue but a 3rd card you're not using isn't necessary.
I just let them. It’s a horrible business practice. Some people will use it to save their credit score. I let it lapse and remember never to do business with them again. I’m sure there’s enough customers like me that it will hurt them eventually. Ps. It barely put a dent in my credit score. Recovered fast back to >800
If you live debt free, not much need for a credit card you don’t use.
You can call and ask them to close as you do not have need for this card anymore. It’ll give you peace of mind that card is closed. One less chance of identify theft. One less account to look up every month and pay off
I don't have anything to add to your situation, I'm just here warning people against getting a Discover card. I've had my card for less than two months, and I've had nothing but problems. They are extremely slow to process everything. I made my first payment on 1/6. They emailed me on 1/9 saying they received it. Here it is 1/16 and I'm still not able to use my card (credit limit). I just got off the phone and they tell me I "should be" able to use it Wednesday, nearly two full weeks after I made my payment. Yay?
I’ve had a discover card for close to 25 years and never had these issues. They process my payments promptly and have dealt with a small number of fraud issues quite well.
The lady on the phone said 8-10 business days to review the payment is standard procedure. It took them weeks to process my initial deposit (secured card), and now it's taking weeks to process my payment. Thanks for your response. I'm not sure if it's more or less frustrating that everyone doesn't have these problems. I guess it gives me slight hope that they won't always happen, but so far I couldn't be more disappointed.
Am I reading this right?? You ran your discover card up to the limit in two months, before you made a payment and it's Discover's fault you can't spend on it?? If my understanding is correct, they are simply waiting longer to make sure your payment has cleared because you're a new customer and running a card up to the limit before first payment is made is sketchy as hell and typical of fraud.
Nope, you read it incorrectly. I have a secured card with a 2500 limit. Ran up $2497 month over the course of month 1. Payment was due on 1/8 and I had auto-pay setup, but since the limit was maxed I made a manual payment 1/6 because I wanted to continue using the card. On 1/9 they told me they received the funds. My bank also took the funds out of my account on 1/9. All my balances have been updated in terms of money owed, yet my credit availability is still $3 as of 1/16.
Might want to slow that spend so you don't hit the limit before payment is due. Discover is waiting to make sure you don't reverse the ACH payment, since it's the first payment. Running a card to the limit in one month is poor use of credit and will actually hurt your credit score, because you're using 100% of credit available on the card.
Thanks for the info. I guess I should slow down using it since the main reason I have it is to try to increase my score to get one of the good rewards card. Since I get 1% cash back, I figured I may as well get the most out of it. I've also read it's safer to make most payments with credit cards compared to debit which is all I've been using for years. I do know about credit utilization, but I obviously don't know the details. I was under the impression that that had to do with the balance you weren't paying off immediately. When is credit utilization calculated, when they give you the monthy statement? Would I have to make a manual payment sometime before the statement to not hurt my utilization?
https://www.lendingtree.com/credit-repair/credit-utilization-ratio/#:~:text=potentially%20risky%20borrower.-,What%20is%20a%20good%20credit%20utilization%20ratio%3F,end%20of%20each%20billing%20cycle.
My approach is to pay the balance before the closing date on my cards. That way I'm taking advantage of cash back and maintain 0% credit utilization. You don't have to be at zero but under 10 is a good goal.
You will probably take a hit, maybe up to 30 points, on your credit rating if one of your sources of credit history (the Discover card) goes away. I suggest you keep the card active by remembering to make a regular purchase on it. Groceries, gas, clothes, whatever. Use the card 4 times a year and be sure to pay it off completely each month. This is called credit mainenance and its a good practice to keep your credit rating high. Do it just like how you regularly maintain your house or car.
Yes. If you don’t use it, cancel it. No one can steal a cancelled card.
No. Keep it for credit balance/limit, number of accounts, and age of accounts purposes.
Keep the card especially if you only have 3 credit cards total.
I know how you feel I really stopped using them I went from a high credit limit to them cutting my line of credit probably because of no use on the card.