Is It OK to Close My Secured Credit Card Since I Can Get a New Credit Card from Capital One?

by Lynnette Khalfani-Cox, The Money Coach on March 11, 2010

in Credit Cards

cut your credit card


Q: Someone had a question that they posed regarding closing their credit card account, and here’s what they asked me. They said, “Lynnette, I have a credit card for bad credit that I opened several months ago. I did it to help me build credit.

I paid a one‑time fee and an annual fee, the whole thing was about $100. Now I’ve got an offer from Capital One and I got approved for a traditional credit card. Should I go ahead and cancel the first card and activate the Capital One card?”

A: My answer is, yes, you should go ahead and open the new account with Capital One, especially since it’s a traditional credit card that will help you establish a more solid credit history.

Make sure you pay those credit card bills on time to Capital One, and only charge a modest amount, an amount that you can reasonably pay off every single month, so that you don’t hurt your credit.

Now the first credit card that you say you opened for “bad credit,” this sounds to me like you had a secured credit card. In other words, you paid the one‑time fee, as you indicated, you put up a certain amount as a deposit, and then that amount essentially became your credit limit.

A secured credit card can also help you to build credit, so no, do not go ahead and cancel that credit card.

The idea here is that you want to start to build a lengthy credit history. And typically what happens when people close out a credit card, it does the exact opposite of what they think its’ going to do.

Many people erroneously think that closing a credit card account will boost their credit scores.

In reality, you frequently hurt your credit rating by closing out accounts. So the short answer is, no, do not close out your initial card that you opened. Just either refrain from using it if you don’t need to use it, but do pay off any balance that you have on it on a regular basis.

And then, yes, go ahead and accept the traditional mainstream MasterCard or Visa or whatever that card was that you got approved from, from Capital One, and just be diligent in its usage, don’t overextend yourself, and pay that bill every single month.

If you do that, you definitely will start a rebound from your past credit mistakes, and you’ll see your credit rating and your FICO credit scores improve over time.


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Although keeping an older credit card account open is better for your credit score, credit history accounts for only 10 percent of the score. If there is an annual fee to keep the secured card, as is often the case, it might be better to cancel the secured card. The annual fee might not be worth the slight advantage to the credit score. If there is no annual fee, then it would be better to keep the account open.

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