Phasing out older high interest credit cards & getting new lower interest/ high reward cards

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Bill Kinnison

• November 14, 2020 17:56

So I've managed to get all my credit card debt paid off. My credit score has been going up. Things are looking good. I have 4 credit cards that I've had for a while. But they're all higher interest, low reward, cards. I understand just closing a card will lower your score for a bit. How do I go about closing the older high interest credit cards & getting new lower interest/ high reward cards? 

 

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  Kim

  • November 16, 2020 22:25

  Hi Bill,

  Congratulations on paying off your credit card debt! This is a great question. Everyone's personal financial needs will be different through a process like this, but I can offer some resources that might point you in the right direction:

  When is it a Good Idea to Cancel a Credit Card?

  5 Things to Do Before Closing a Credit Card

  Best of luck and thank you for reaching out! 

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  CHRISTOPHER BATTISTA

  • December 10, 2020 15:37

  Congratulations on the achievement! 
  I would recommend you develop a game plan as to what your goals are with the new cards, research and pick your winners. Nerdwallet was super helpful for me with this by comparing the approval odds to my current score, also weight the current special offers. I assume you are credit monitoring thru some source that tells you that the big 3 are actually reporting a $0 balance, because what is reported might be different than the truth.
  Then when you are reporting $0 debt, apply for the new cards while you still have the old ones, as this increases your odds. It is pretty good idea to apply to them all at once, from different companies(amex, cap one, chase etc..  do not request multiples from the same co at the same time, because they will use the same underwriters and this is a red flag)  The beauty of 60 second approvals is they can only use info available that exact minute, and you get to choose the minute they look.. 

  once your new cards are in your hands, that's a great time to trim the fat. This method will get you the best approval odds and take the least toll on your score. personally i would keep anything that doesn't have an annual fee because it keeps your debt:available ratio lower.

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  DeadManMoshing

  • December 23, 2020 21:26

  Hi Bill,

  Something I would like to point out too. If you get rid of an older card with high interest, it may affect your credit age. What credit reporting agencies do is combine all of your credit cards and average your credit age for an exact credit age. This is a small factor in determining your credit score but a factor. Just thought I'd point that out.

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