Will getting a new credit card and closing another affect my credit?
"Several events will always result in a reduction of your score, including: These will show up in the short term, but I don't think it's worth $40 per year in perpetuity to avoid this. These aren't serious ""black marks"" in the same category as missing payments, carrying too much debt, or foreclosures/evictions, etc. These effects are designed to signal issuers when someone acquires a large amount of credit in a very short period of time, which may indicate a greater risk. If your credit is good and you are using your other cards responsibly, closing the card (given the annual fee) would not cause me great concern if it were me. Since you are so much better of a risk than you likely were in college, you can also call Capital One, ask to speak with a supervisor, and ask them to drop the fee and increase your credit limit. They should be able to easily verify that you meet the requirements for other types of preferred cards they offer, and they should be willing to offer you improved terms rather than losing your business. It is very possible they simply haven't re-evaluated your risk since you initially applied. Also, remember that these types of effects determine only a portion of your overall score. Activity is also a major component. Rather than leaving an unused card open for history and debt-to-limit purposes only, I would also recommend having some minimum level of activity, such as an automatic bill payment, on each card you carry. The effect of using your cards over time will have a significant positive effect on your score. Best of luck!" I once called Amex to cancel a card with an annual fee. Instead, they were able to give me a different card with no fee. They were happy to do it. Of course, Amex has fantastic customer service, while Capital One is not known for it. But, its worth a five minute call, and you will retain your good score.
"I am interested in seeing what happens to your report after you test this, but I don't think it's possible in practice, would not affect your credit score, and also wouldn't be worth it for you to carry a negative balance like that. Having a -1% credit utilization essentially means that you are lending the credit card company money, which isn't really something that the credit card companies ""do"". They would likely not accept an agreement where you are providing the credit to them. Having credit is a more formal agreement than just 'I paid you too much this month'. Even if your payment does post before the transaction and it says you have a negative balance and gets reported to the credit bureau like that, this would probably get flagged for human review, and a negative credit utilization doesn't really reflect what is happening. Credit utilization is 'how much do you owe / amount of credit available to you', and it's not really correct to say that you owe negative dollars. Carrying a negative balance like that is money that could be invested elsewhere. My guess is that the credit card company is not paying you the APR of your card on the amount they owe you (if they are please provide the name of your card!). They probably don't pay you anything for that negative balance and it's money that's better used elsewhere. Even if it does benefit your credit score you're losing out on any interest (each month!) you could have earned with that money to get maybe 1-2% better rate on your next home or car loan (when will that be?).  TLDR: I think credit utilization approaches a limit at 0% because it's based on the amount you owe and you don't really owe negative dollars. I am very interested in seeing the results of this experiment, please update us when you find out!" Need is a strong word. As far as merchants are concerned, if they accept, e.g., Visa credit, they will accept Visa Debit. The reverse is not necessarily true. Up until lately, Aldi would only accept debit cards (credit cards have higher merchant fees), and when I used to got to Sam's Club, they would accept Visa debit, but not credit (they had/have an exclusive deal with Discover for credit). So, yes, they can tell from the card number whether it's credit or debit. However, I've never heard of a case of the situation being biased against debit.*  That said there are some advantages to having a credit card: ETA: I don't know how credit history works in the EU, but in the US having open credit accounts definitely does affect your credit score which directly affects what rate you can get for a mortgage.  *ETA_2: As mentioned in the comments and another answer, car rentals will often require credit cards and not debit (Makes sense to me that they would want to make sure they can get their money if there is damage to the car). Many credit cards do include rental car insurance if you use it to pay for your rental, so that's another potential advantage for credit cards. "One of the factors of a credit score is the ""length of time revolving accounts have been established"". Having a credit card with any line of credit will help in this regard. The account will age regardless of your use or utilization. If you are having issues with credit limits and no credit history, you may have trouble getting financing for the purchase. You should be sure you're approved for financing, and not just that the financing option is ""available"" (potentially with the caveat of ""for well qualified borrowers""). Generally, if you've gotten approved for financing, that will come in the form of another credit card account (many contracting and plumbing companies will do this in hopes you will use the card for future purchases) or a bank loan account (more common for auto and home loans). With the credit card account, you might be able to perform a balance transfer, but there are usually fees associated with that. For bank loan accounts, you probably can't pay that off with a credit card. You'll need to transfer money to the account via ACH or send in a check. In short: I wouldn't bet on paying with your current credit card to get any benefit. IANAL. Utilizing promotional offers, whether interest-free for __ months, no balance transfer fees, or whatever, and passing your debt around is not illegal, not fraudulent, and in many cases advised (this is a link), though that is more for people to distribute utilization across multiple cards, and to minimize interest accrued. Many people, myself included, use a credit card for purchasing EVERYTHING, then pay it off in full every month (or sometimes immediately) to reap the benefit of cash back rewards and other cardholder benefits. I've also made a major payment (tuition, actually) on a Discover card, and opened up a new Visa card with 18-months of no interest and no balance transfer fees to let the bill sit for 12 months while I finished school and got a job." The first thing I assess when looking at new credit cards is whether it has no annual fee, the second thing I look at is how long the interest free period is. I always pay my credit card off in full just before the due date. Any rewards program is a bonus. My main credit card is with CBA, I have a credit limit of $20K and pay no annual fee. I get a bonus point for every $ I spend on it, for which I exchange for store gift cards to help with my everyday spending. Approximately 3500 point would get me a $25 gift card. But my main reward with the card is the interest I save by keeping my own money in a Home Loan Offset account whilst I spend with the Bank's money. Then I pay the full amount off by the due date so I do not pay any interest on the credit card. I only use my credit cards for purchases I would usually make anyway and to pay bills, so my spending would be the same with or without a credit card. I can usually save over $500 each year off my Home Loan interest and get about $350 worth of gift cards each year. If I didn't have any Home Loans then I would keep my money in a high interest depost account so I would be increasing my interest payments each year. Sure you can probably get credit cards with more generous rewards programs, but how much are you paying each year in annual fees, and if you don't have an interest free period and you don't pay off all the amount due each month how much are you paying in interest on the card? This is what you need to way up when looking at rewards programs on offer. Nothing is for free, well almost nothing ! "The biggest (but still temporary) ding you'll see on your credit score from opening a new account is from the low average (and low minimum) account age.  This will have a stronger effect than the hard pull of the credit report, which is still a factor (but not much of one if you only have 1-2 pulls in the past couple years).   Having a lower average account age increases your risk to lenders.  Your average will go up by one month per month, and each time you open an account it will suffer a drop proportional to the number of accounts you already had open before.  So if you want to have a more ""solid"" credit score that stays strong in the face of new accounts in the future, it's better to open a few more accounts now (assuming you can ride out the temporary drop in score and aren't planning to go e.g. mortgage-shopping in the very near future).   Having an additional line of credit will also likely cause your credit card utilization (total balance / total credit limit, expressed as a percentage) to decrease, which would tend to increase your credit score, counteracting the age factor, unless your utilization is already extremely low (which it probably is given your monthly account payoffs).  There are various credit score simulators out there, from places that show you your credit score, and you can put in a hypothetical new card account to see the immediate likely impact for your particular situation.   You identified other costs, such as risk of fraud and fees.  You should check your statements once in a while even if you're not using the card, just to make sure no one else is.  The bit of additional time required for this is a nonzero cost of having an open credit card account.  So is the additional hassle of dealing with having the card stolen etc. if you carry it in your wallet and your wallet's stolen. If you have an account with zero activity for some number of years, the bank may close it automatically and that can reflect negatively on a credit report (as a bank closure of the account, the reason is often obscured).  Check your terms and conditions and/or have some activity every so often to prevent this from happening.   Some of the otherwise most attractive credit cards have monthly or annual fees, which will cost you, and you won't want to close those because it would then reduce your credit score (e.g. by reducing the total available credit and increasing your utilization percentage) - so the solution is don't apply for credit cards that have monthly/annual fees.  There are plenty of good cards without those fees. With a credit score that high, you can get cards that have some very good benefits and rewards programs, as well as some with great introductory offers.  Though I'm not familiar with details of Amazon's offer, $80 cash up-front with nothing else seems unlikely to be among your best options.  I would think that for at least some of the fee-free cards available to you, the benefits exceed the costs, and you could ""cash in"" some of the benefits of your good credit record to get those benefits (i.e. this is one of those things you work hard to build good credit for), while also building your long-term reputation for repayment reliability.   Also be aware as you shop around for cards that credit card companies pay fairly high referral fees to websites that send customers their way, so if you want you can think about who you're supporting when you click the link that takes you to an application you complete, and choose to support a site you think is providing a useful consumer-focused service.   As factors affecting your credit score in addition to payment history (i.e. making regular payments as agreed on the new account will help you), Equifax lists:" After doing some investigating, my employers contract with the credit card company has a clause that basically specifies that despite my name being on the credit card, and bills being sent to me, all liability is on the company. Additionally, the employer reserves the right to garnish wages in the event of a balance on the card. So it looks like it won't affect my credit score. I appreciate all of the advice. If you've got the money to pay off your credit cards, do it. Today, if possible. There is no need to pay another penny of interest to them.  They may or may not cancel your cards. That is up to them. We can't know what will trigger an individual bank to cancel your card. The answers you got on your other question offer some speculation on why some banks might cancel, but this is not something banks reveal. Anything you do on your own to try to keep the cards open is just a guess, and may or may not succeed.  But ask yourself: why do you want to keep these cards?  Is it for the convenience of the card? I agree that credit cards (paid in full monthly) are convenient, but when they start costing you money, they aren't worth it anymore, in my opinion. Debit cards have most of the same conveniences of credit cards, and are free.  If it is for emergencies, I recommend instead building up an emergency cash fund. That way, if an emergency arises, you won't be forced to borrow money at high credit card interest rates.  If the reason you want to hang on to the credit card is so you can spend more than you have, then you will find yourself in the same situation again. If I were you, I would pay off the cards ASAP. If the banks cancel your cards, just switch to a debit card and be thankful that you are no longer continuously leaking money to the banks. Assumptions 1 & 2 are correct. Plus you will improve on credit score. The only disadvantage is if you get lax about it and overspend beyond your limit ... Plus a small risk of fraud of card transactions ...