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Going Against Popular Opinion And Closing A Credit Card Account.

Why? The $125 yearly fee, that’s why. I have been an American Express Business Gold customer for a few years now, and while they have been very good to me and I have collected many, many rewards points that I plan on cashing in any day now, I will be closing my account. The annual fee is just not worth what I actually use the card for each month, which is currently only my web hosting bill. It was worth it when I was charging everything each month to the card, as the rewards really added up, but now that I charge everything to my Amtrak Rewards Chase card each month, that $125 a year is looking pretty steep. Don’t you think?

I stopped paying the annual fee on my Citibank American Airlines reward card already, because I gave up flying over 2 years ago. And while I realize that the popular opinion about credit cards is that you shouldn’t close any accounts, I don’t necessarily subscribe wholeheartedly to that concept. For me, a few tiny dings on my credit report is worth the price of ditching 2 credit cards I no longer use. Granted, I have other cards and I don’t carry any debt, so canceling the cards is not going to increase my credit to debt ratio or anything like that. It will amount to a ding on my credit score and nothing more. But the positives far outweigh this little negative, in that…

– I will no longer have annual fees due to credit cards
– I will have less cards to maintain and keep track of
– My credit report will show less open credit, which could actually help the next time I need to borrow money

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So if you feel the need or desire to cancel a credit card, it’s not necessarily as terrible as some “experts” will tell you. (In fact, some people think they have come up with a good use for paid-off cards) Your credit score will bounce back pretty quickly from any hit it takes while you are cleaning up your financial life by getting rid of accounts you no longer need or want. I have decided that from this point forward, I don’t think I am willing to pay annual fees on credit cards anymore, as I already have the 1 card I use for every single purchase every month. The rewards or benefits will have to be extremely beneficial to me or my business in order for me to pay for the privilege of using a credit card with a fee!

Photo from Shutterstock


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Comments (6)

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  1. Craig says:

    What are some advantages to the card that warrant the annual fees?

  2. I think that a credit card would have to provide advantages and benefits such as dishwashing, laundry and childcare before I would pay an annual fee.

    I doubt there are any cards out there worth paying anannual fee for, because you can probably find whatever you need in a card that has no fee.

  3. David says:

    Um, discount on FedEx? If I had tons of business expenses, it would be worth it. But without them, the annual fee is just too much.

  4. Kyle says:

    I don’t think I have ever paid an annual fee for one of my credit cards, if they started charging me one I would be right behind you in the take this card and shove it line.

  5. While I am sure you are already aware of the negative effects to your credit score in closing credit card accounts it does become somewhat tricky if the credit cards have annual fees. It then becomes a calculation of: is the benefit of maintaining a marginally higher credit score worth the cost of the annual fees every year? In your case, apparently it does not but in the case of someone that may be applying for a home loan or refinancing or getting some other type of loan or line of credit where they want their credit score to be as high as possible then the annual fees will most likely be an expense that is well worth it because of the lower interest rate that they might be able to get with their credit score at its highest.

  6. Kira says:

    This one is actually relatively painless. Your Business Gold Amex does not show up on your credit report, thus canceling it is a no-brainer. Business cards, unless you get behind, rarely show up on your personal credit report. I have an Advanta Biz card that pulled my personal credit score when applying, but never published the card data to my personal credit report.

    If you want to keep a Biz Amex, I would switch it to the Simply Cash Biz Card, which has zero annual fee, 5% cash back on wireless services, and pays your cash back monthly. Again, because it’s a biz card, does not show up on your personal credit score.

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