Ask Liz Weston

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Credit Cards

Q&A: What to do with a drawer full of unused credit cards?

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Dear Liz: At 75 and 79, my husband and I have no plans to buy a new car or property. We own our home and cars. We have excellent credit ratings. We use one major credit card. I’m consolidating our financial life for our heirs. We have a drawer full of cards we never use. Is there any reason not to just cancel these cards and save our heirs the trouble? Should I care if my 850 credit score tanks?

Answer: At this point, simplifying your finances probably makes more sense than trying to keep your credit scores as high as they can possibly be.

Cards you aren’t using still need to be monitored for fraud, which is a hassle, plus you may be paying unnecessary annual fees. Reducing the number of accounts should make your life easier, but don’t go too far.

As explained in previous columns, each spouse should have at least one card on which they are the primary account holder. A spouse who is an authorized user often loses access to the card when the primary account holder dies and card issuers close the account. Few credit card issuers offer joint accounts these days, so you should determine who is the primary account holder and who is the authorized user on each of your cards before deciding which to close.

You can reduce the damage to your scores by trying to preserve as much of your current credit limits as possible. Ideally, the cards you keep will be the ones with the highest limits. If you’re closing other accounts at your chosen issuer, you can ask that the credit limits for the shuttered cards be transferred to the card you’re keeping.

Q&A: Is one credit card better than two?

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Dear Liz: I have a long-standing credit card with a national bank. As I travel a lot, I just opened a travel rewards card with the same issuer. I would prefer to keep the new card and close the old one, rather than keep two cards active with the same issuer. I understand from reading your columns this might (temporarily?) lower my credit score. Any other downside?

Answer: It’s hard to predict how an account closure will affect credit scores or how long the impact will last. The effect is likely to be greatest for people with few credit accounts and short credit histories. You may be able to mitigate some of the damage by asking that the credit limit from the old card be transferred to the new one.

Before you do that, however, consider why you’re averse to having two cards with the same issuer. The old card may have benefits the new one lacks, and could be a helpful backup if your new card is lost or compromised. The case for keeping the old card is strengthened if the annual fee is low or nonexistent. Just remember to use the old card occasionally to minimize the chances the issuer will close it for you.

Q&A: Co-owned credit cards are great … if you can find them.

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Dear Liz: Recently you recommended that both spouses have a credit card on which they are the primary account holder. Another option is for the spouse to apply to be a co-owner of their current credit cards. This worked for me when my husband passed away five years ago. The bank canceled his access, but left mine intact.

Answer: Few credit card issuers offer joint accounts these days. Most are set up so one person is the primary account holder, with the option of adding other people as authorized users. That’s why it’s important to make sure each spouse is the primary account holder on at least one card because the authorized user’s access will probably end when the primary account holder dies.

Q&A: Til death do your credit part?

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Dear Liz: My wife and I have credit cards where I am designated as the primary account holder. What happens to my wife’s access to the account should I pass? Should she now apply for credit cards where she is the primary holder?

Answer: Credit card companies typically close accounts when they learn of the primary cardholder’s death. (It’s usually the executor’s job to inform creditors of the death, but card issuers also learn of deaths from the Social Security Administration.)

So it makes sense for both spouses to have at least one or two cards where they are the primary account holder. If you die first and all the cards are in your name, she might have to scramble to get replacements.

This week’s money news

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This week’s top story: Smart Money Podcast on unlocking financial opportunities for women. In other news: How the next generation will use credit cards, weekly mortgage rates decline, following the rate of inflation, and grocery prices tick back up in lates inflation report.

Smart Money Podcast: Unlock Financial Opportunities for Women: Jean Chatzky on Investing, Negotiating, and More
Learn about salary negotiation and investing strategies and how they can be especially helpful for women facing unique personal finance challenges.

How the Next Generation Will Use Credit Cards
The classic wallet will be as outdated tomorrow as typewriters are today.

Weekly Mortgage Rates Decline, Following the Rate of Inflation
Mortgage rates fell in the week ending July 11, with fixed rates seeing their largest week-over-week drop since May.

Grocery Prices Tick Back Up in Latest Inflation Report
Grocery prices are up 0.1% in June, according to the consumer price index.

Q&A: My kids grew up. Will their credit scores go down?

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Dear Liz: Many years ago I took out a credit card to pay for my two children’s college expenses. They were authorized users for miscellaneous expenses. They no longer use or even have access to the cards. Now they are both in stable, well-paying jobs. I would like to keep the card but remove the authorized users. How would this affect their credit scores? Or mine, for that matter?

Answer: You helped your kids establish good credit by adding them as authorized users. Removing them won’t affect your credit scores. The effect on their scores depends on how well they’ve managed credit on their own.

The impact should be minimal if they’ve continued to build credit by opening their own credit cards and paying those on time. Ideally, for credit-building purposes, they’ll also have a solid history paying an installment loan, such as a mortgage, student loan or auto loan.

If they haven’t used credit much and have a thin file — generally, fewer than five accounts showing on their credit reports — the damage might be more significant. If that’s the case, you may want to delay removing them as authorized users while they open other lines of credit. They should know that they don’t have to carry debt to have good credit: Just using credit cards lightly and paying the balances in full should do the job.