Cancelling a Credit Card - Bad Move?

Parent Cafe
1

<p>My 24 year old son has gotten his first credit card right before he left for college, has been working for a couple of years now. A few months ago, he was “talked into” getting a second credit card when he stopped by the bank, that this card has all the bells and whistles, and it is “free”, no annual fee, points on purchase etc. Next thing you know, I found out that indeed the card has no annual fee for the FIRST YEAR, but an annual fee of $75 (or $79, I forgot) the second year if you do not maintain a balance of $50,000, are you serious? What young adult has or keep a $50,000 cash balance in the bank?</p>

<p>Should he cancel this credit card before the first year is up since he does not want to pay the annual fee? I heard that cancelling credit card will hurt one’s credit score. He still lives at home to save money as he intends to buy his own place in 3-4 years (maybe a small condo) so he needs to build his credit history and keep a good FICO score.</p>

<p>Currently he pays his monthly credit card bill on time, has a small car loan which he puts on auto pay, not sure what he else he should do to build up his credit score, and cancelling this credit card may set him back.</p>

<p>Any recommendation and advice? Thanks.</p>

2

<p>Open a no fee card and CANCEL that sucker, unless the bank will waive the fee in lieu of his cancelling (sometimes that works when you call-- ask for the retention dept) What a RIPOFF. Dont worry about the FICO score.</p>

3

<p>Canceling one credit card will have a negligible effect on his credit score, especially 3 or 4 years out. </p>

4

<p>Is he planning a major purchase anytime soon? If so don’t cancel. If he does cancel, make sure that he checks his credit rating with the credit bureaus and the cancellation is noted a “by customers’s request”.</p>

5

<p>It’s weird what will affect your credit. My son has an excellent credit score. After he moved across country, he opened a bank account there and eventually closed his account here. When he went to borrow money for a car a few months later, he had problems because he had no bank account more than a year old! This despite having a job there with a good income. That was not something we were aware could happen. </p>

6

<p>When he calls to cancel the bank may change the terms of the card, or offer a different card entirely. He should still be prepared to walk away, but in this case he may end up with a better deal. </p>