Q: I have 5 credit cards and am thinking of closing one redundant card, a 4-year-old Visa, because it is the same card as a 6-year-old card. Should I close it? Will it affect my credit? And can I combine the credit on one card since it is the same type of card?
A: All good questions. Let me first try to answer your last question about "combining the credit on one card." Do you mean combining balances, or combining credit limits?
If, by saying they are the same "type of card" you mean that these two Visa cards were granted by the same issuer, and you are looking to do a balance transfer, then no, most credit card issuers will not allow you to move balances from one card to another card when the cards in question were both provided by the same exact company.
On the other hand, if you want to close one card and increase your available credit on the other card by the same amount, it certainly doesn't hurt to call your issuing bank and ask. If you've had a good payment history, there's a chance the bank will increase your credit limit, if not by the full amount, then at least part way.
Bear in mind, when you seek a bigger credit line, the credit card issuer will normally pull your credit rating -- or at least assess your prior payment history with them. This process won't usually be averted simply because you recently closed a second account. Such an account review or full-fledged credit review is even more likely given the current lending and credit environment. And it's that credit evaluation, above all, that is likely to determine how big a credit limit a credit card issuer will offer.
Credit utilization ratio
Regarding your main question, for a number of reasons, closing a credit card account could potentially have a negative impact on your credit rating. The reason is because closing a card might negatively impact your credit utilization ratio.
Your credit utilization ratio is simply a fancy way of talking about the amount of debt that you have charged versus the amount of credit that you have available to you. For example, if you have two credit cards, each with a $5,000 credit limit, and you've charged $4,000 worth of items on one of the cards and nothing on the second card, then your credit utilization ratio is 40 percent because you've used up that much of your $10,000 in available credit. If you close out one of the credit cards, leaving you with just $5,000 in available credit, your utilization ratio suddenly jumps to 80 percent, after which that portion of your credit score would likely take a hit.
In your case, since you have five credit cards, including a card you've held for six years, it's possible that closing just that one four-year-old card would still leave you with a considerable amount of available credit. This should lessen any impact on your credit score. It's also best to keep your oldest cards active.
Additionally, take heart in knowing that if you do close a credit card account, and immediately see your credit score fall, the hit to your credit score is likely to be short-term in nature, lasting only a few months.