Is That True ?

Q: I applied for and got a Citibank credit card that gives me 5% cash back for all purchases I make upto May 1, 2004. I made full use of it and am very close to the maximum annual cash back I can get on it. A couple of weeks, they advertised for a new, similar offer, this time for all purchases through October 1, 2004. I'm considering cancelling the old account and applying for the new one. I've heard cancelling credit card accounts is bad for one's credit history. Is that true ?

A: -Canceling a credit card in and of itself isn't necessarily bad for your credit score but repeated openings and closings of accounts don't help. Generally the longer you've had the same credit card the better as it shows stability. Of course, paying your bills on time helps greatly. Perhaps you should find out your credit scores and make your decision based in part on how high they are. If your FICO is at 800 then what the heck, get the new card. If it's at 500 you'd best rethink. Oh, if you're planning on buying a house or a new car or something where you need your credit at its highest, then take that into consideration as well. If you do cancel the current card, do it in writing and make sure it's listed on your credit report as being closed per your request as that looks better than if Citibank initiated the closing. -It depends. If you are applying for a mortgage, the more available credit you have, and the less debt you maintain, the better. If you are not going to apply for a mortgage or other large loan. If you go apply for another credit card a few months later, the other credit card company might turn around and say you already have too much credit, or it might not. -Up to a certain extent. But they also consider what would happen if you *used* all of that available credit, so having too much available credit can count against you.

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