Time to Cancel my Credit Cards?

October 29, 2006 10:03 PM

With the recent MBNA and Bank of America merge, is it okay to/should I cancel my MBNA credit cards?

According to this earlier askme, canceling accounts can have a negative effect on your credit report. But if the accounts are being switched over (every single card is getting a new number), do I keep the old credit or am I starting over anyway? I'm not happy with the way things look after the merger.

Additionally, has anyone had both MBNA *and* BoA cards, and can they comment on the relative customer service experiences? I'm well aware that both companies are scum of the earth corporations (which is part of why I'm considering cancelling).

posted by Deathalicious to Work & Money (9 answers total)

When an account number changes, the account does not necessarily "start over" on your credit report. I've had accounts change numbers and still stay connected to the same account history on my credit report. Unless there's an annual fee or something they've done to really annoy you, I would at least wait a few months and check if the account history went away before doing anything.
posted by raf at 10:17 PM on October 29, 2006

Thanks so much for asking this question! I signed on to BoA today to check my account balance and saw my MBNA credit card balance on the page. I had no idea why it was there. Frankly, I was a touch freaked out. I don't know why I didn't hear about the merger. And now I can't help but wonder, should I switch? I'll be interested to see how the answers progress.
posted by mostlymartha at 10:44 PM on October 29, 2006

Best answer: it is true that cancelling out credit cards can (and most likely will) have some negative impact on your credit score. it seems however that this is only really worth talking about if you have a very high or low credit score. I remember hovering around 640 a few years back when I cancelled a citibank card that had a 27% rate and the hit I took was only about 15 points. it evaporated within four months. the key here is to have the credit available to you not decrease dramatically. that means that if you plan on closing a card with a $500 limit, you should start using $500 less of the other available credit than you did in the months before. that way, the available credit to you will not go down.

I highly recommend the continuous credit monitoring available through truecredit.com. I pay 15 bucks per month for it and it allows me to see my latest credit report as often as I want. I refresh to see my score at least once every week. (they don't like it when you do that and hide that option pretty well but I will gladly let everyone know how to bypass it, just ask).

also very important: ask if your cards report the high usage/credit available amounts in the first place. I know capital one cards do not report how much of your available credit is actually being used, which makes it look as if you are maxing out at all times.
posted by krautland at 11:02 PM on October 29, 2006 [2 favorites]

Best answer: Another reason you may want to cancel your card -- and the reason I cancelled my MBNA card -- is that MBNA is one of the single largest contributors to the Republican party. It was also, if I recall correctly, the largest contributor to Bush's re-election campaign in 2004.
posted by louigi at 12:59 AM on October 30, 2006

Also if you cancel a CC (and you have debt to begin with) then your debt to credit ratio goes up. For example you have 2 CC's with a $10,000 and $5,000 in debt that means you have debt to credit ratio of 50%. If you get rid of one of the cards (say it has a $3000 limit on it), now your debt to credit ration goes up to 71.4% because your debt is $5000 out of $7000 and not $10,000.

So even though the actual amount of the debt is the same it looks like you have more because your available credit amount is lower.
posted by eatcake at 6:19 AM on October 30, 2006

Louigi, that is insane! I'm so glad you brought that up and I'm even more glad I cancelled my MBNA card about a month ago, just for that Republican party funding reason.
I've joked for years that that stupid card was the devil because I could never seem to get rid of it. Once I paid off my whole balance, called to cancel it and dealt with the most aggressive operator ever, who convinced me to keep it for emergencies. Then an emergency arose, and I said "Well, what the hell, I already used it, might as well keep doing it." That was about 18 months ago and when I called to cancel it last month the operator said "Any reason?" I said "No, just trying to get my debt down." She said "OK, you're all set!"
It was a miracle! So, Deathalicious, if you decide to cancel (which I highly recommend, MBNA sucks, and you could do so much better with Chase or Citibank, in my opinion - better interest rates and all) you shouldn't have many problems with pushy customer service operators.
posted by slyboots421 at 7:20 AM on October 30, 2006

also a large republican contributor: urban outfitters. I kid you not.
posted by krautland at 9:31 AM on October 30, 2006

Response by poster: Thanks for all the suggestions, folks. I think I'll cancel my more recent card with them (somehow I managed to end up with 3 total with MBNA) -- it has a smaller credit limit and almost zero use. So, I'll pay it off (very small amount) and then cancel, making sure to follow the steps outlined in the related AskMe cited above.

On a bright note, my Wachovia credit card is being moved away from MBNA so I can keep using that one without any worries.
posted by Deathalicious at 1:05 PM on October 30, 2006

The only times when canceling old cards affects you is if the line you're canceling is your only line with more than a couple years on it, or if it's your largest line and makes up more than about 25% of your total available credit.

If neither of those apply, canceling won't affect your score.
posted by Mr. Gunn at 7:48 AM on October 31, 2006 [1 favorite]