Is there anyway to not pay the AMEX membership fee and keep my credit score untouched?

July 9, 2009 3:38 PM

How can I not pay the American Express membership fee and not have to close the card (which negatively impacts my credit score) because I dont want to use it anymore?

I know closing a card negatively impacts an individual's credit score. So what I normally do is just keep the card open but cut it up so I dont use it.

But, I dont want to use my gold American Express business card anymore. The problem is there is a $125/yr membership fee that I dont want to have to pay for when I am not using the card. (And it doesnt make sense to pay $125 just so that my credit score isnt dinged)

Is there anyway to not pay the fee and keep my credit score untouched?

What do people do in this situation?

posted by schindyguy to work & money (8 comments total)

can american express change your account to a personal/non gold card?
posted by nadawi at 3:41 PM on July 9

I think you are somewhat confused. As far as I know, charge cards don't count heavily in your credit score because they have no fixed credit limit - and your AmEx card is a charge card. That's one. Second and most importantly - what counts in your credit score, is the amount of available credit versus utilization. If your utilization is very low, then closing a card makes little difference, except if it is your longest open card (length of credit history is a factor in the credit score). Even if your amount of credit available decreases, this impact usually disappears after a few months. I wouldn't sweat it - close it.
posted by VikingSword at 3:48 PM on July 9 [2 favorites]

Every time I'm charged an annual fee by a credit card company, I call and ask them to waive/cancel it. It works about 80% of the time. I'd try that first.
posted by helios at 4:07 PM on July 9

If you do decide to keep it open, call them up and say that you're looking to close your account due to the annual fee and you're wondering if there's a way you can switch to a card that isn't so expensive. They will probably cut you some sort of deal.
posted by zachlipton at 4:08 PM on July 9

@VikingSword. Your right its not a credit card, its a charge card. I called up to confirm that.

So I guess its best if I just close it and wait for the impact to disappear after a few months...
posted by schindyguy at 4:49 PM on July 9

Chances are, there will be no impact, period. Not even for a few months. Were this a regular credit card, then there might be impact that would disappear in a few months. However, before you close down the card, make sure you use up all your points you may have accumulated (easiest is to convert them to cash, if you have enough points).
posted by VikingSword at 5:26 PM on July 9

@VikingSword
Ya I have about 20k pts which translates to about $100 USD so they were trying to bait me into just applying that credit towards the $125 fee...screw that. I'm gonna by myself a steak dinner
posted by schindyguy at 6:17 PM on July 9

Second and most importantly - what counts in your credit score, is the amount of available credit versus utilization. If your utilization is very low, then closing a card makes little difference, except if it is your longest open card (length of credit history is a factor in the credit score).

Average account age also counts. So if you've had this card open significantly longer than your other open accounts, closing it will hurt that part of your score. Length of credit history is only around 15% of your score anyway though, so it's probably not worth paying $125/year to prop up your score by a few points.
posted by burnmp3s at 3:44 AM on July 10