Author Topic: Newbie: Paid off my credit cards--now what do I do with them?  (Read 2854 times)

ObviouslyNotAGolfer

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Newbie: Paid off my credit cards--now what do I do with them?
« on: November 11, 2016, 01:07:44 PM »
Hi,

Longtime reader, first time poster. My wife and I used the plastic while we were younger (grad school and postdoc years) to take a number of fabulous European and other vacations (we're happily child-free!) that we couldn't really afford. Yes, I know it was not the best decision, but I am glad we spent the money on travel instead of a bunch of consumer items. Then, we moved to Canada (Vancouver) for my postdoc, and it was extremelyexpensive (more plastic). Even in my younger, less financially responsible years, I knew better than to use credit for consumer goods, entertainment, or living expenses--therefore our debt was not too bad. I had a small student loan that I paid off in full several years ago.

In any case, I read Your Money or Your Life many years ago, but recently (re)discovered it in my garage and decided to read it again. Then I started to get religion about our finances and life goals--one of which is financial independence and the freedom to travel.

After not too much sacrifice, but much better planning than previously, I paid off our two cards. Both had pretty low interest rates but I became motivated to obliterate the debt asap! Now, we have a Chase "Slate" and a Citibank "Diamond Preferred" (whatever that means, LOL) card with zero balances.

So, now I am wondering what to do with them:

I would like to cancel one--probably the Chase--and keep the Citi (which I have had for longer) for emergencies. (Yes, we are building up an emergency fund/savings!) However, I know that the overlords like to punish the little people for acting responsibly and this will ding my credit score. I would also like to never use either of them again, even if I will pay the balance in full every month. But, I realize that they will probably start bugging/threatening me to use them or my acct will be canceled.

I have heard some people say that it is best to carry a small balance and pay it off over time, but I refuse to carry a balance ever again.

I have thought of asking for rewards cards as replacements (Chase Sapphire?), but I would prefer to get an AMEX gold card for larger purchases/travel (fairly frequent for us) and an AMEX cash rewards card (6% back on groceries) for groceries, gas, etc. I like using AMEX for a variety of reasons (no interest, ever), and we have a long record of on-time payments with the standard green card.

Any ides as to what I should do here would be appreciated.

Thanks!
 
PS: Am a fan of The Big Lebowski (and also dislike golf for many reasons), hence the username.


« Last Edit: November 11, 2016, 01:17:10 PM by ObviouslyNotAGolfer »

ZiziPB

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #1 on: November 11, 2016, 01:40:03 PM »
Cancel the cards if they have an annual fee.  Otherwise you can just let them sit unused or use them responsibly (pay off in full every month).  I've never had an issue with the bank forcing me to use it or lose it as far as credit cards are concerned. 

mwulff

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #2 on: November 11, 2016, 01:50:52 PM »
I agree with ZiziPB, if they don't cost you anything just keep them in a drawer.

The real question is whether you'd be tempted to use the cards and thereby getting back into a debt situation? Considering your discipline in paying them off this probably won't be a problem.

But if you don't feel tempted just throw them in a drawer.

GizmoTX

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #3 on: November 11, 2016, 02:28:43 PM »
Convert your card(s) to no annual fee versions. The Citi Double Cash card is really good for earning cash back. Don't cancel your cards -- you'll hurt your credit rating & you never know when you might need one in an emergency. Carrying a balance of any size doesn't build credit & just costs you more. What does build credit is paying on time every month & utilizing less than 20% of your total credit limit. If you think you will be tempted to charge too much, make the card difficult to access, like in a deposit box or even frozen in an ice block.

charis

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #4 on: November 11, 2016, 02:33:21 PM »
I've never heard anyone say that carrying a small balance is best.  That doesn't even make sense - it hurts your credit.

ObviouslyNotAGolfer

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #5 on: November 11, 2016, 03:10:25 PM »
Thanks for the replies. Neither of these cards has an annual fee.

And, no, I am not tempted to use them. Sure, there are many things I'd like to have, but I do enjoy what I already own. I have always tended to buy high quality stuff that lasts forever--e.g., my 1991 Volvo 740 SE, bought new, and kept in very good condition all these years. It is still extremely reliable, cheap to own, roomy, has plenty of power--it is my daily driver. I have no desire for another car--until maybe electrics become cheap and have a 300+ mile range.

When I want something new, or a vacation, I put it on AMEX (paid in full the next month) or pay cash/debit. I am at the point in life where the enjoyment brought by a credit-financed high-end luxury item or vacation I cannot afford would be far outweighed by the knowledge that I am in debt. We are also piling funds into our retirements accounts (IRA, 403b, 401k, etc). Will likely open a Roth next year at some point.

« Last Edit: November 11, 2016, 03:13:07 PM by ObviouslyNotAGolfer »

Catbert

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #6 on: November 11, 2016, 03:20:23 PM »
You do need to use them somewhat or they may be cancelled.  Use at least a few times a year.  Or maybe charge a recurring bill (e.g., internet) to each cc.  You could set it up all automatically if you wanted:  auto charge to cc and then auto pay cc.

I wouldn't have an Amex as my only card.  Many places, especially if you travel internationally, don't accept Amex.

Saving in Austin

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #7 on: November 11, 2016, 07:12:25 PM »
The credit card companies may cancel the cards if you don't use them at least once a year.

Than has been my experience.

It can be a $5 purchase it doesn't matter. Use it once and mark your calendar for next year.

Keeping the cards open will maintain your debt to credit limit ratio which contributes to keeping your FICO score high.

Retire-Canada

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #8 on: November 11, 2016, 10:57:32 PM »
I have a spare credit card [no fee] that I do not use. I carry it as a back up. Lost my only card on a trip once and it was a real drag. My bank doesn't care that I don't use the spare card.

I use the main card for everything I can as I get cash back.

To the OP if your cards are no fee I'd just keep them. Credit can be a handy tool as long as it's used responsibly.

Travis

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #9 on: November 12, 2016, 01:48:58 PM »

I have heard some people say that it is best to carry a small balance and pay it off over time, but I refuse to carry a balance ever again.

This is a myth that needs to die a horrible death.  Using your cards with a low utilization rate and then paying them off builds your credit.  Unnecessarily carrying a balance on them (paying less than full each month) just gives the credit card company money they don't need and doesn't do anything for you in return.

GizmoTX

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #10 on: November 12, 2016, 02:17:46 PM »
We've NEVER carried a balance on our credit cards since getting our first one in the '70s, & now have credit ratings in the 800s. So does DS, who got his first CC at age 17, now 23, & pays in full every month. It's the utilization & on time payments that matter for building credit.

marion10

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #11 on: November 12, 2016, 04:59:54 PM »
I would definitely keep two no fee cards- that way if one is lost or compromised you will still have one for emergencies. If you don't use a card it can get cancelled- so use once a year or set up a recurring bill on it.

ObviouslyNotAGolfer

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Re: Newbie: Paid off my credit cards--now what do I do with them?
« Reply #12 on: November 12, 2016, 06:32:12 PM »
Thanks everyone. This makes good sense--i.e., keep the cards and use infrequently for small purchases, while not carrying a balance.