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Ask Money

Credit score, not

Chris Farrell Jul 14, 2010

Question: One of my two credit cards will begin charging an annual fee this year. I have had this card for ten years and always pay the entire balance each month; my credit limit is half my annual salary. I’m conflicted over whether I should keep the card–I am opposed out of principle to spending money for the privilege of spending my own money. However, closing the card will vastly decrease the amount of available credit I have, and will probably hurt my credit score. Do you think I should suck it up and pay the annual fee to keep my credit card? Eric, Washington DC

Answer: I don’t see why you should pay a fee to keep a card you don’t want and remain a hostage to the credit scoring industry.

You might take a brief hit to your credit score when you cancel the card. But so what? Are you buying a house in the next couple of months? A new car? If not, the nick to your score is meaningless. The best way to maintain a good credit score anyway is to pay bills on time, which you do.

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