Should I close my credit card account if it doesn't have a balance.
I am getting married in 4 months and we both have 3 or 4 credit cards each. None of the cards carry a balance but we do have $50 annual fees on some of them. She has a higher credit limit than I do but we both have very good credit scores in the high 700's. My question is, should I close my credit card accounts and just be added to hers or should I keep the cards, pay the fee, and still be added on to hers?
Generally speaking, it is better to have separate accounts in the event a financial hardship arises. If you experience a financial hardship, or a divorce, it will be easier to decide who will take the hit to the credit or how the accounts will be divided.
In order to determine whether it makes sense to close an account is to take into consideration the age of the account. If the account to which you are paying the annual fee to is an account that you have had open for a long time then it may not be a good idea to close the account. However, if the age of the account is relatively close to that of your other accounts then it may make sense to close it. When you close an account that is the oldest account on your credit report it can negatively impact your credit rating significantly. If the account is not much older than your other accounts then the affect may be negligible. Total debt and total available credit counts for about 30% of your credit score. A credit score considers how much debt you have compared to the total available credit on your accounts. If you close the accounts with the annual fee, and not the other accounts that don't charge the annual fee, then the damage might be negligible and should not be of too much concern.
Credit cards are a good way to build up a credit history. However, it is important that you maintain fiscal discipline and financial planning through budgeting, saving, and investing. The answer to your question forces me to introduce to you the worst case scenarios such as a financial hardship or divorce. The decision you make now with your credit will dramatically affect your situation if you were to ever find yourself in a difficult position.
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