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Question:


I’ve paid off my 3 credit cards completely. Wahoo! One problem: One of my cards has an annual fee, which I must pay whether or not I use the card. Will my credit score be affected if I cancel the card that charges the annual fee?
-DebtFree


Answer:


Wahoo is right. Nicely done. One element of your credit score is the ratio of outstanding debt to the amount of available credit, so if you have some debt and the second figure goes down, then your score could be adversely affected. But if you’ve gotten out of hock on your credit cards, why not just get a new card that doesn’t charge an annual fee and then close the account on the one that does? As someone who has no balances due on any piece of plastic, you would be much sought after by card issuers. Compare and contrast the various options and pick the one that suits you best.
-Conrad de Aenlle



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