Personal Finance

Impact to credit score of closing down 24-year old BMO credit card

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  • Jul 22nd, 2016 11:56 pm
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[OP]
Deal Fanatic
Oct 7, 2007
8389 posts
4353 upvotes

Impact to credit score of closing down 24-year old BMO credit card

With the BMO inactivity fee coming into effect, a friend of mine is considering closing down their 24-year old BMO credit card account. They never use it because the benefits of other cards are so much more rewarding but has kept the card through the years because it is one of their oldest. I remember reading a few times that it is always best to keep your oldest credit card account open because it helps your credit score. Does anyone know what the impact is of closing down such an account? Is it quantifiable in terms of the points that would come off one's credit score?

Any information you can provide would be most appreciated.
21 replies
Member
Apr 2, 2016
482 posts
317 upvotes
Average age of accounts makes up 10% of your credit score.

Credit utilization makes up 30% of your credit score.


If your friend's utilization goes up as a result of closing this account, and he doesn't have any other older revolving credit to offset the AAOC reduction, he could see a large reduction in his credit score.

I don't see any good reason to close this account completely though. BMO offers several no-fee credit cards, and they do product switches which would preserve the history of this account and your friend's credit score.
Deal Fanatic
Mar 24, 2008
6052 posts
2305 upvotes
Toronto
Just close the account, it will still stay on the credit report for another 6 years so the average account age won't be be affected.
Illegitimi non carborundum
Newbie
Feb 9, 2015
85 posts
69 upvotes
Welland, ON
I'd keep it and make a small purchase every so often to keep it active, especially if it's no-fee.
Deal Expert
Aug 2, 2001
16734 posts
6965 upvotes
Close is and forget about it. Your credit score is a proprietary number and if your friend has 24 years of good credit, it will hardly be a blip on the radar. They will still be able to access whatever credit they should qualify for based on income/history.

People place too much emphasis on credit score - the emphasis should be placed on paying your bills as agreed to. The worst case scenario is, provided you do, you'll have to close down a credit card or two before getting another.
Deal Addict
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Sep 9, 2012
4334 posts
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Oakville, ON
TrevorK wrote: Close is and forget about it. Your credit score is a proprietary number and if your friend has 24 years of good credit, it will hardly be a blip on the radar. They will still be able to access whatever credit they should qualify for based on income/history.

People place too much emphasis on credit score - the emphasis should be placed on paying your bills as agreed to. The worst case scenario is, provided you do, you'll have to close down a credit card or two before getting another.
This. Only reason to consider anything else would be if your friend was worried about not getting approved for a car loan or mortgage in the next 6-12 months. Otherwise close it and move on - especially as noted if there's concern about ongoing fees for inactivity.
Deal Addict
Jan 31, 2016
1805 posts
1819 upvotes
Toronto, ON
Why not just tell your friend to buy a coffee once or twice a year on the card? Or a small purchase in-store? It will eliminate the inactivity fee. If there is no annual fee for the card, mind as well keep it for another 26 years and make it an even 50.
Deal Addict
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Oct 24, 2005
4823 posts
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Burlington
I received the letter as well and plan on making a $1 purchase every year. Will cost them more in mailing me the statement but hey they're the ones that wanted to implement the stupid fee.
Newbie
May 31, 2016
4 posts
1 upvote
Totally agree. Just like a bad credit account sticks with you forever even after it gets closed, so does a good credit account. This myth that you shouldn't close accounts is perpetuated by incumbent issuers to scare you tinto keeping their account open - giving them a little more time to try to reactivate you.
Deal Addict
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Apr 2, 2010
2154 posts
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GTA
I would keep the card, then every 2/3 times a year (use a family member's birthday/important holiday to you, etc) to remember to pay $1 towards a cell phone bill.

This way the card can stay at home and stay active with little effort.
Deal Addict
Dec 13, 2010
2075 posts
983 upvotes
ON
That's annoying.. maybe try to keep it active and if too annoying close it down and don't worry.
Member
Jun 17, 2009
491 posts
34 upvotes
Vancouver
Why are you guys so paranoid about closing an older credit card that you never ever going to use... especially if there's going to be an annual fee tact on?

Just close it. If you have other long standing credit cards, it shouldn't be too much of an impact but then I have really good credit so I don't really care. I have tons of revolving credit cards and close the ones that I dont even use anymore.
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Deal Expert
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Jan 27, 2004
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T.O. Lotto Captain
pchi wrote: Why are you guys so paranoid about closing an older credit card that you never ever going to use... especially if there's going to be an annual fee tact on?

Just close it. If you have other long standing credit cards, it shouldn't be too much of an impact but then I have really good credit so I don't really care. I have tons of revolving credit cards and close the ones that I dont even use anymore.
You crazy? You'll lose points off your credit score!!! After that... It'll ruin your life.

... :lol: ;)
Member
Jun 17, 2009
491 posts
34 upvotes
Vancouver
UrbanPoet wrote: You crazy? You'll lose points off your credit score!!! After that... It'll ruin your life.

... :lol: ;)
LOL, I'm not crazy... took out a mortgage with like 9 revolving credit cards (i closed a few CC that I don't use anymore) plus 3 line of credits... and just got financing a 0% car now.

I have no idea what my credit score is... but I never miss a credit card payment.
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[OP]
Deal Fanatic
Oct 7, 2007
8389 posts
4353 upvotes
It seems that the current market for debt is really generous in that all banks and credit card companies would love for us to load up on really cheap debt. Does this mean our credit card scores are less meaningful than in a normal interest rate environment? Not sure if this changes if and when interest rates increase but some of my attitudes towards debt are from the dark ages. This is not to say that I will be more receptive of debt that I cannot pay off each credit card statement but just sayin that it seems like lenders will gladly lend to anyone with a heartbeat.
Member
Jul 11, 2004
235 posts
48 upvotes
Darn. I just got hit by this fee on my account.

I just want to let people know that the customer service rep was willing to cancel the fee but warned that this is a one time gesture and they will not do this again.

Now I got to figure out whether I want to cancel this 13 years old card.
Deal Fanatic
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Feb 19, 2010
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Emendo wrote: Darn. I just got hit by this fee on my account.

I just want to let people know that the customer service rep was willing to cancel the fee but warned that this is a one time gesture and they will not do this again.

Now I got to figure out whether I want to cancel this 13 years old card.
Peoples' obsession with credit scores is both sad and amusing at the same time. If you're not using the card, cancel it. If the impact on your credit score is the biggest worry in your life I'd say things are going pretty well for you. IOW, start worrying about things that really are important.
Deal Fanatic
Jan 18, 2003
5865 posts
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Mississauga
Good to know about this inactivity fee... News to me... Who really reads their terms of agreement... Lol
Member
Jul 11, 2004
235 posts
48 upvotes
Conquistador wrote: Peoples' obsession with credit scores is both sad and amusing at the same time. If you're not using the card, cancel it. If the impact on your credit score is the biggest worry in your life I'd say things are going pretty well for you. IOW, start worrying about things that really are important.
I am not in the financial industry, so I could only make decisions based on hearsay.

Are you familiar with any of the models that you could provide us with more information?
eg. Is it based on open date? Is it based on number of payments that are made recently? Is it based on recent activities?

Thanks.
Member
User avatar
Dec 6, 2005
422 posts
82 upvotes
I was charged the fee recently too. What did you say when you called? Did you just ask to have the charge reversed, or did you ask to cancel the card?

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