Ask June > , , > When paying a hefty annual credit card fee makes sense

When paying a hefty annual credit card fee makes sense

September 13, 2012 • J.J. Montanaro

Q: I am try­ing to rebuild my credit score after a divorce. I cur­rently have two credit card accounts and an auto loan. One of my credit cards has a $60 annual fee and I was think­ing about clos­ing this card because of the annual fee. Is this a good idea?

–Cha­sity, Web­ster City, Iowa

A: I’m not a fan of pay­ing unnec­es­sary fees and there are plenty of credit cards avail­able with­out that annual fee. How­ever, if build­ing your credit score is a top pri­or­ity, I’m not sure you should close the one you have until you’re in a bet­ter place from that stand­point. In fact, doing that could have a neg­a­tive impact on your score. There are five key areas of man­ag­ing debt that impact your credit score and clos­ing that card could poten­tially impact a cou­ple of them and your score. I’d encour­age you to review this infor­ma­tion on what goes into your score pro­vided by the folks that devel­oped credit scor­ing, Fair Isaac. Once you’ve got your score where you want it, con­sider replac­ing the annual fee card with a card that doesn’t come with the fee. Good luck.

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