Applying for a credit card and canceling a card should not be treated lightly. Both affect your credit score. When you apply for a new card, the card issuer will do what’s called a ‘hard pull’ on your credit and this is noted on your credit report which can negatively impact your credit score. When you cancel a card, that too has an impact on your credit score as your total credit limit goes down.
With the new CARD act in place, more and more card issuers are cracking down on in-frequent card users by either charging an annual fee or raising rates or simply canceling the card. None of these bode well for your finances. Citi is notorious for doing this.
While Credit Unions are not immune to the CARD act, there aren’t too many card cancelation horror stories involving Credit Unions. (Personal experience – I’ve had a card with my credit union for over 10 years, I rarely use it, but my Credit Union renews it every year and doesn’t pull a ‘Citi’ on me. Thank you DCU!)
Big Banks put shareholders interest ahead of customer interest. So do Credit Unions. But with a Credit Union, you are the shareholder.