A reader wrote to me with a question, in response to my entry regarding how Capital One credit cards hurt your credit score. She is concerned with Capital One’s bureau reporting tactics and their junk mail, but it’s her oldest account, so she doesn’t know if closing the account is the best thing to do.
I responded with some suggestions, but I’m wondering what advice readers may provide. Here is the text of her email.
I was shocked to learn about how Capital One reports credit. I really want to cancel my Capital One account, since it only has a $4,000 credit limit and I am tired of all their unsolicited mail offers for checks. But I hesitate to do so because it is the oldest credit card I have had (about 8 years), and I’ve read that you are supposed to hang on to your oldest accounts to build your FICO score.The other card I have is a Discover, which is 6 years old with a $8,000 limit.
Do you think it would be a safe move on my part to cancel the Capital One card? I just recently paid off both cards, on which I had a combined balance $6,000.
I know you’re not a financial counselor, but if you had a general opinion about this I’d appreciate your thoughts.
I suggested checking her credit report (which can be done for free once a year from each bureau through annualcreditreport.com) after having not used the Capital One card for a while to determine how they are reporting her activity and limit. If they are reporting a credit limit of $0, it may be worth it to cancel the card and keep the Discover Card, whose age is only two years younger.
Feel free to leave your thoughts, especially if you think I provided a poor opinion.
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I vote to close the account. It’s probably not helping your score, especially with a 6 year old Discover card with a good limit on it.
If it was the only card with a long history I would say keep it but the discover does cover that to some extent. Though if the card isn’t used at all and it has a $0 balance then it probably does little harm having it around.
Start with the credit score; go from there.
Capital One is my oldest credit card as well. Here is how I get them to report my full credit limit (almost). They often send out purchase checks that have no fees at all. I just write that for near my credit limit and put it in the bank. Then I just pay off the credit card bill before interest is due. You can also do very short term arbitrage this way.
Are you going to apply for new credit any time soon? If you are, I would wait to close it until after you’ve secured the credit. Otherwise, close the account. It sounds like more of a nuisance than anything else and within a couple years your credit will be in pretty much the same shape as it is now, if you take care of it.
I agree with Easy E. If she is not looking for major borrowing in near future, she can go ahead and close it.
However, it can be a very natural reaction to open a new account after she has closed one. If that is the case, then she should apply immediately after closing the Capital One account (so the new credit inquiry will happen before the card closure is reported) or apply for the new card before closing this one. In either case, this will cause some damage because after a few months, her credit history will reflect both, the closed account and the new inquiry. Point is that she needs to make sure that she doesn’t need large credit in near future.
There is a simpler way. If it’s just a matter of junk mail trouble, then if possible, just call up Capital One and ask them to stop sending the junk mail. No need to cancel the card in that case.
I’m considering opening an American Express Blue account for the cash back bonus. Does this card correctly report credit limits? I’ve read some american express cards do not—but these are probably not of the credit variety as Am Ex Blue is (I think).
Thanks!
Jason: I don’t have AmEx Blue, but I have an American Express Optima card (that goes unused). They do report my credit line properly rather than the “high watermark.”
I understand Capital One and the repoting agencies were sued over this practice does anyone know if the lawsuit is still pending or what the result was?
According to myFICO, the average age of all of your credit cards is part of the score. When you cancel a card, is that taken out of the calculation?
Good luck trying to cancel a Capital One credit card. It took me an hour to convince service reps and their supposed supervisors to accept my request to close my account. I weigh in on the side of those who suggest you close your account. I am an excellent customer and this is in inferior product. We certainly will not be able to influence these companies to improve their products and customer service (seems to be an oxymoron when in the same sentence with Capital One) unless we refuse to charge with their cards. In an age of growing insecurity with cards, I doubt Capital One will protect its customers – what if someone gets their hands on those checks they are constantly mailing? That is a far greater threat to your credit rating that canceling an old card.