Ask Money

A credit card and a HARP

Chris Farrell Dec 14, 2010

Question: I have a Upromise MasterCard that pays me 1% back on all my purchases to help pay down my student loans. The loan is paid off. I have no kids to use the Upromise benefits to save for a 529 plan so essentially I no longer need the card’s benefits. I have had that card for about 10 years.

I now have a Visa Wells Fargo Mortgage Repayment card which provides a similar benefit as the Upromise card, it pays me 1% back to help pay down my mortgage. My new Visa Wells Fargo Card gives me nearly the same credit line as the Upromise card.

I have one other credit card, an AMEX Blue Rewards card, which I have had for about 8 years. I always pay off my credits cards in full and on-time. I like keeping the credit cards I have open mean and lean. I want to get rid of the Upromise card to maintain only having 2 open credit cards at a time.

Will closing the Upromise account sway my credit score in any meaningful way??? I plan to apply for a mortgage refi in about 8 months. Why 8 months and not right away you ask, that’s another story about the limitations of HARP loans. I enjoy the show! It’s great! Cal, White Plains, NY

Answer: I’d love to hear more about your experience with HARP. For those who aren’t up on their acronyms, HARP is shorthand for the Home Affordability Refinance Program. It allows owners who owe more than their homes are worth to refinance at a lower rate. There are a number of restrictions, and the most important may be that the mortgage must be held or guaranteed by either Fannie Mare and Freddie Mac Most of us have heard more about HAMP, the Home Affordable Modification Program.

It lets owners confronting foreclosure to modify the terms of their mortgage to make it more affordable. That’s the idea, at least. Both programs have been a public policy dud. You’re one of the few people across the country that looks to benefit from the refinancing option. Let us know how it goes?

I’ve written a lot on my thoughts about closing credit card accounts and credit scores. Here is a representative post. I would close the account–just not yet.

There’s no reason to keep the card if you don’t need it. However, I would wait until the refinancing is over. The odds are slim that closing the account would have much–if any–impact on your credit score, but why take the chance? But on the HARP is done I’d get rid of it.

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