Combining cards: Rolling 2 credit limits into 1 card
Little-known practice can help protect scores when closing cards
You have scads of cards spilling out of your wallet. You're thinking about closing some accounts, but worry that closing cards might result in a credit score hit.
A little-known option may allow you to reduce the number of cards while keeping the same credit lines. It's called card combining -- rolling two or more cards from the same card issuer into one, without reducing your total buying power or dinging your credit score.
"It's not typically advertised or broadcast much," Susan Herbst-Murphy, a consumer credit and payments industry expert for the Payment Cards Center at the Federal Reserve Bank of Philadelphia. Card combining is "usually something the customer has to request."
Some issuers let you combine cards
Capital One is open about card combining. It advertises the option to cardholders on its website and spells out how its card combining process works.
You can merge accounts through its online servicing system, says Capital One spokeswoman Pam Girardo. First, you decide which card you want to keep and which you want to close, she says. The card you keep retains its original interest rate, terms and perks, but gets a credit limit boost that reflects the total limit from both cards, Girardo says.
Merging two credit limits avoids the usual risk of closing a card -- the lowered overall credit utilization ratio that may result from closing a card and losing its credit line.
There are rules. Both accounts must have been open at least six months and the card being closed must have a zero balance and no pending transactions, Girardo says. Once the cards are combined, the account the consumer chose not to keep gets reported to the major credit bureaus as closed and paid in full.
Other issuers, including American Express, Chase and Citi, quietly offer the option on a case-by-case basis.
It's a super easy way to get high credit lines, which leads to more high credit lines.
"Essentially, this is something we could consider," says Marina Hoffman Norville, vice president of corporate, financial and risk public relations for American Express. The company's decision would depend on various factors, such as the customer's credit profile, history with the company and other debt. Customers need to call to make the card-combination request, Hoffman Norville says.
Not all companies offer card combining. "We don't have anything like that," Bank of America spokeswoman Betty Riess says.
When combining cards, you lose the closed card's terms and features, so decide carefully, says Nessa Feddis, a senior vice president at the American Bankers Association. You don't get to pick and choose the best aspects of each card. "It's not 'create your own card,'" she says.
Pros and cons of card
If you're overwhelmed by tracking too much plastic, card combining has advantages over your other two options: keeping all of your accounts open or closing some cards.
First, combining cards reduces the number of accounts you have to handle, Herbst-Murphy says. "You've got one less statement to open, one less bill to pay and one less account to check online," she says.
If you have multiple cards with annual fees, combining them can also save you money, Herbst-Murphy says. "You'd benefit by only paying one annual fee," she says.
Closing accounts can pare down your credit cards, but it also can reduce your overall credit limit and affect your credit utilization ratio, the total amount of your credit you're using, as well as possibly reduce the .
When you instead combine cards, you keep the same total credit limit and spending power you had before, but it's concentrated in one card instead of two or more. With a larger credit limit on the card you keep, you're less likely to bump up against the credit limit than you would be on a lower-limit card, Herbst-Murphy says. Getting too close to the credit limit on a card can have a negative impact on your score.
"I'm really excited about the ability to combine cards," says Irene Navickas, a marketing consultant from Honolulu, Hawaii, who is trying to cut her total number of cards from 25 to a more manageable 10 without hurting her credit utilization ratio. She pays her credit card bill in full each month, but worries she might have to carry a balance in the future. "You never know if you'll get fired or get sick and have to carry a balance," she says. So, having a high amount of total available credit "gives you that cushion," she says.
Rolling two or more cards into one higher credit limit card also can help to build credit because it makes it more likely that other issuers will approve you for cards with higher limits, says Linda Pack, founder of CreditBoards.com. The tactic is known as a "prybar," because you're leveraging one high-limit card to get more, she says.
"It's a super easy way to get high credit lines, which leads to more high credit lines," when you have good credit, Pack says of card combining.
There are few downsides to the practice. One is that some consumers prefer to have multiple cards in order to spread out payments, Herbst-Murphy says. For example, they might have one card with a payment due date in the first half of the month and another card with a due date in the second half, she says. "Some people like to break up those payments a little bit," she says. "That's how they like to manage their money."
cards? Take this advice.
If you're thinking about streamlining your card collection by combining, there are several factors to consider, including the effect on your credit score. Here are four card combining tips:
- Know the rules. Each credit card company has different requirements and procedures for combining cards. Learn them. For example, some issuers won't give you the entire sum of the limits from the cards you combine, says John Heimel, a small-business owner from Dallas who has combined cards and founded the site MilesMethods.com. Others will pull your credit before granting your request, he says. A "hard pull," an official check of your credit, results in a small dip in your score. On CreditBoards.com, consumers share their experiences in dealing with different credit card companies to combine cards.
- Keep the old. If you've had one of your cards for, say, 25 years and the other one for, say, five, it's probably better to roll the newer account into the older one, Herbst-Murphy says. That's because length of credit history counts for about 15 percent of your FICO score, according to myFICO.com. That includes the length of time you've had your cards, including the age of your oldest account, the age of your newest one and the average age of all accounts.
- Consider your perks. Before making a decision on card combining, look over the terms and conditions and the benefits on each of your cards. If you depend on the purchase protection, travel insurance or some other card perk, you might want to think twice before rolling it into another card. Most consumers don't need more than one perk-rich rewards card, but that's not always the case, and it's important to remember the "soft benefits," such as flight or room upgrades, before you say goodbye to a card, Herbst-Murphy says. "If you're a frequent flier of Airline A and a frequent stayer at Hotel B, having two rewards cards might have benefits," she says.
- Ask about your rewards. It's important to make sure you won't lose any rewards you've already racked up on the card you plan to close. For example, with Capital One, you must cash in the rewards on the card you're not keeping before the account is closed. When you combine cards via the website, a prompt will remind you to redeem your rewards, Girardo says.
In the end, it's up to you to figure out what works best for you -- keeping all of your cards, simply closing some accounts or card combining. "There's no one best way to do it," Herbst-Murphy says.See related: When to close an annual fee card
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