Retire Wise | October 2020

Think Twice About Cancelling Credit Cards You No Longer Use

It may seem like a good idea to close credit card accounts you no longer use to avoid annual fees or if you’re not benefiting from reward programs during the pandemic. However, doing so could have an adverse impact on your credit rating. That’s because credit utilization weighs heavily in calculating your credit score.

How Credit Utilization Works

While it may sound counterintuitive, when you close a credit card account, you lose the available credit limit on that account. This makes your credit utilization ratio—the percentage of your available credit in use—jump up. Lenders interpret that as a sign of increased risk because it shows you're using a higher amount of your available credit.

For example, if you have two separate credit cards with a credit limit of $5,000 on each, your combined available credit on the two cards is $10,000. If you have a $5,000 outstanding balance on one and a zero balance on the other, your credit utilization rate would be 50%. However, if you close the zero-balance card, that lowers your total available credit from $10,000 to $5,000, thus raising your credit utilization rate to 100%. According to Experian, one of three national credit reporting companies, ideally, you want to keep your credit utilization rate to 30% or less of outstanding credit to help maintain a strong credit score.¹

Should You Downgrade to Save on Fees?

If you’re no longer benefiting from travel, dining or other credit card reward programs, but are still paying high annual fees, downgrading your card may be an option. Downgrading generally involves switching to a card from the same issuer, within the same card portfolio, that has either a lower annual fee or no annual fee and fewer benefits, while maintaining the same credit line. Later, you can switch back to a rewards card. This enables you to maintain your credit utilization ratio while lowering or eliminating credit card fees.

However, before downgrading, read the fine print to make sure that switching to another card won’t result in losing unused rewards. Take time to weigh the value of any unused rewards that you may lose against the cost of annual fees to determine if downgrading is worth it. If you’re not sure, or you have additional questions, contact your credit card provider.

If you have questions about managing your finances, call the office to schedule time to talk.

6 Virtual Travel Experiences that Don't Require Leaving Home

Travel plans cancelled or put on hold? No problem! Thanks to a growing number of websites and streaming services, you don’t have to leave home to experience national parks, world heritage sites, and iconic destinations around the world. And thanks to your smart phone, tablet, or laptop—you can go right now, without packing a bag, boarding a flight, or waiting in line.  

Below are six virtual excursions and tours you don’t want to miss.

1. Ever wonder what it’s like inside a lava tube? Why Mars appears brighter than many stars in the sky? How to climb into a glacier crevasse? Wonder no more. Google Arts & Culturetakes visitors behind the scenes to the hidden world of the U.S. National Parks. The series includes explorations within Hawaii Volcanoes National Park, Dry Tortugas (Florida), Kenai Fjords (Alaska), Carlsbad Caverns (New Mexico), and Bryce Canyon (Utah).
   
   
2. Like a side of education with your travel? Road Scholar offers dozens of free, on-demand lectures that take you inside historic places and events. Expert instructors around the world discuss everything from Vikings in France to Oscar Wilde, bird migrations, the evolution of Native American cuisine in Santa Fe, and dozens more.
   
   
3. Did you know the Smithsonian Institution is the world's largest museum, education, and research complex? With 19 museums, the National Zoo, and multiple art and sculpture galleries and gardens, the Smithsonian offers something for all ages and interests. Best of all, you can visit current and past Smithsonian exhibits without leaving your couch. A good place to begin is the National Museum of Natural History—Virtual Tours.
   
   
4. What if you could witness the sunrise, sunset, or night sky in real time from Stonehenge? Now you can. English Heritage, a nonprofit organization focused on preserving historical sites, offers an illuminating look at Stonehenge with an interactive tour featuring a 360° view from inside the monument at Stonehenge Virtual Tour: Inside the Stones. Their Skyscape website enables you to experience the skies above the iconic stone circle and view the solar alignment at Stonehenge.
   
   
5. Can’t get enough of merry old England? Pour a cup of tea and explore the Queen’s official residence at Buckingham Palace. Begin at the foot of the Grand Staircase. Tours include the Throne Room and drawing rooms where you can zoom in for a closer look at priceless furnishings, artwork, and stunningly ornate ceilings.
   
   
6. While you're at it, why not cross off The New Seven Wonders of the World from your bucket list? Kick back with your feet up as you climb Machu Picchu or walk the Great Wall of China. These 360° panoramic tours also include the Taj Mahal, Petra, and The Colosseum, among others.

Bon voyage!

^{1 https://www.experian.com/blogs/ask-experian/will-closing-a-credit-card-hurt-your-credit/}