Closing AMEX Gold/Opening AMEX Blue Cash (payment, rate, credit)

[Michael Scott]

Hi everyone,

I'm a college student graduating in the near future, and I've always had an interest in personal finance, hence my career choice of accounting. Excuse the length of my post, the real bulk of my actual question is lower down the page, but I feel the background is relevant so here goes...

I'm starting to really get all my ducks in a row, and this includes cutting expenses. Cutting expenses may mean closing out the AMEX Gold card account that I've had for about 2 years now, because I really don't spend enough to justify the $125/year fee. But first, let me give a bit of background:

My only two sources of credit history are my current AMEX Gold card that I've had since 2011, and a past BoA card from 2009 that was a joint account with a parent. I believe I am off of this now, and the account might be in fact closed. There are actually two listed on the MyFico report, one that says its been terminated and one that says there has been no activity since 2009. I did a MyFico and CreditKarma check and both have me at 691. I'm assuming what's mostly against me here is my age, and also it looks like the BoA card was at one point late, but again, excuse my ignorance on this because I was 16 at the time so my parent was handling it, it was just an emergency card for me. But anyway, I'm never late on my charge card, so I'm assuming the only things against me are my short history and that one late payment that I got associated with.

I'm starting to bable, sorry. Back to my real question here:

Lately I've been contemplating closing my charge card. I really don't think its necessary to be paying that amount of a fee to spend as little as I do. However, I don't want to close out an account if its going to hurt my credit score, which seems to be sort of fragile at my age. Plus, as much as I dislike the fee, I do like the ability to charge large amounts with essentially no limit when necessary, for example when I had eye surgery that was covered by insurance, instead of walking around with $5000, I just put it on my AMEX. On top of that I love the customer service and non-points related benefits of AMEX.

So this is what I was thinking, opening up another account with them for the Blue credit card. I figure this will help me in a couple of ways:
1. From what I understand, AMEX back dates to your earliest account? This will help my AAoA. This will also give me the ability to later close the Gold card and still have a long history.
2. It will give me a credit mix, with one Credit Card and one Charge Card.
3. From what I understand, charge cards don't go into utilization, so I can have a very low balance on my credit card, and then if I need to charge large things to my Gold card. This will give me a utilization score, which I basically don't have right now, and a good one at that.

This doesn't really solve my problem of the fee I feel like is unneccessary, but if my thinking is correct, by opening another card with AMEX now, it will give me the option to cancel the Gold card in the future with basically no real penalty.

So quick recap,

Option A: Carry on as normal
Option B: Close Gold card, open a credit card, probably AMEX Blue or one with a bank
Option C: Keep Gold card, open Blue card, with possibility of closing Gold card later.

What do you all recommend for my situation to best help my credit score?

Thanks in advance!

[earlyretirement]

Well, do you have membership rewards points with your Gold card? If so, DEFINITELY open up a blue card so you don't lose those points.

Personally I think it would be worth it to keep the Gold Card. It can really come in handy for the insurance/purchase protection coverage in place. But definitely if you have points, I'd open a free blue card.

You can find EVERYTHING you want to know about the AMEX program here:

American Express Membership Rewards - FlyerTalk Forums


Me personally I'd say keep the Gold card. You might not think you're spending enough with it now but $125/year isn't much at all. You likely spend more at Starbucks each year other other junk vs. the benefits of having the Gold card. I've used the purchase protection benefits several times over the past 2 decades. AMEX's customer service is the best as you noticed.

It wouldn't hurt opening up the Blue Card and canceling if you absolutely can't justify the card. But most people at least buy a few electronic items each year which would be worth the extra double warranty, return protection, purchase protection, Roadside Assistance, travel accident insurance, baggage insurance plan, car rental protection, etc.

You shouldn't lose any points if you open the Blue card. In fact, the "member since" date on the blue card should be the same as when you first opened an account with American Express.

[hensleya1]

Hi Michael Scott--

I went a very similar route myself recently, closing my Zync card with AMEX ($25 fee yearly) and instead applying for the Blue Cash Everyday. I waited another month or two until I closed the charge card so that the account would zero out before I cancelled it - and I also cashed out my remaining points.

I'd do it if I were you. Unless you spend a LOT of money and take advantage of their services all the time, it's difficult to justify any yearly fee for a credit card. Plus I'm actually making out much, much better with the rewards from Blue Cash than I ever was with Membership Rewards (3% on groceries and 2% on gasoline is FAR better than the 0.6% I was getting if I wanted cash or 1% on gift cards at places at the mall).

Before you cancel the Gold card, make sure you actually get approved for Blue Cash first. My CreditKarma was over 750 and I was still given a sky-high interest rate on Blue Cash.