Canceling credit cards? Which ones will hurt you most

PHOENIX - Some credit card companies are threatening annual fees and higher interest rates and that has many people canceling their cards. But before you make the call, understand you could be doing more damage to your credit score and wallet.

Mortgage Originator Dean Wegner says, “You want to have a nice balance from five to 15 credit cards.”

Fifteen credit cards sounds outrageous, but Wegner says it's all about your credit ratio.

He adds, “If I only have two credit cards it’s a one in two factor, so if something happens to one of those two it will affect 50 percent of my overall credit history.”

He says the larger your credit report, the less damage one negative issue will have on it.

“So think of it as a little ship or boat; you know if a 30 day late comes in, it's not going to affect the ship. If you only have a one page credit report with little history, one ding will sink the ship,” says Wegner.

So he says ideally there's no reason to cancel your credit cards.

But, if you still plan on canceling, start with cards that have an annual fee.

“If there's no balance and there's an annual fee, let's say $80 or a $120, cancel it,”  Wegner says.

And before you cancel, make sure if you have a rewards card to first cash in on all of the benefits.

Wegner adds, if you're getting rid of one to get something better, consider your routine. If you pay your balance off every month then reward cards are great.

But if you can't pay it off and you have to maintain, you're always going to go with the lowest APR.

If your credit is too bad to get new cards, Wegner says the best place to start is with secured credit cards, but only under one condition…

“It has to say we're going to report to Experian, TransUnion and Equifax. If it doesn't have those features don’t waste your time with that credit card,” says Wegner.