Author Topic: What to do with the credit cards we have paid off already?  (Read 5885 times)

Mickijune

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What to do with the credit cards we have paid off already?
« on: November 21, 2012, 10:29:52 AM »
I searched but didn't find anything about this specific topic. If I missed it...I apologize.

We are focusing right now on eliminating credit card debt. I have been reading a lot online on what to do when the cards are paid off and how it will affect our credit, but I am getting a lot of conflicting information. It's bad to close the acct, it's not, keep a small balance, blah, blah, blah. We have paid off 7 small balance (under $2k) credit cards in the last 3 months. Three more to go ($1700, $5300 and $6400). What should we do with the 7 that are paid off? Keep them, close them, keep a small balance? I'm confused.


zoltani

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Re: What to do with the credit cards we have paid off already?
« Reply #1 on: November 21, 2012, 10:41:45 AM »
First, you have 10 fucking credit cards!?!?! WHY?

What to do with the 7, SEVEN, paid off credit cards?  Close them all!  Pay off the other 3 and keep them to use for regular purchases.  In any case find a way to cut down the total number of cards.  No one needs 10 cards!

There is nothing wrong with paying the entire balance each month.  Consider making all of one type of purchase with your card, say groceries,  and pay the entire balance each month.  No minimum payments, pay the entire balance!


Karl

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Re: What to do with the credit cards we have paid off already?
« Reply #2 on: November 21, 2012, 10:42:18 AM »
Your credit score is based, at least partially, on the amount of available credit that you do not use.  If you can withstand the temptation of using these, and they do not charge any annual fee, you could simply put them in a safety deposit box and let them gather dust. 

Of course, if you never intend to take out another loan in your life, then you could destroy the cards since your credit score would have relatively little impact on your future life.

michaelrecycles

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Re: What to do with the credit cards we have paid off already?
« Reply #3 on: November 21, 2012, 10:49:37 AM »
Your credit score is based, at least partially, on the amount of available credit that you do not use.  If you can withstand the temptation of using these, and they do not charge any annual fee, you could simply put them in a safety deposit box and let them gather dust. 

Of course, if you never intend to take out another loan in your life, then you could destroy the cards since your credit score would have relatively little impact on your future life.

+1 to this. Keep them around to help your ratio of available credit used - in a safe, if needed.

jtmoney

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Re: What to do with the credit cards we have paid off already?
« Reply #4 on: November 21, 2012, 11:00:00 AM »
If you are worried about your credit score, you could adopt the following strategy: choose one monthly expense per card.  For example, dedicate a card to groceries and charge all your groceries, and only your groceries, to that card and then pay it off completely at the end of the billing cycle.  I use this to keep my accounts "active" without paying any interest.  For example, you could have a card specifically for

-groceries
-gas
-cell phone
-internet
-insurance payments (or split car/home/renters/health/life/whatever else over different cards)
-etc

The only issues might be if the company in question, say your internet provider, charges you a fee to pay by credit card.  Obviously you do not want to be paying extra money if don't have to.  I personally don't have as many credit cards as I do bills so I double/triple up on some cards.  The main point is that you pay them off COMPLETELY every month.  If you cannot commit to doing this, then just lock/cut the cards up but keep the accounts open.

Also, if any of the cards are rewards cards you will want to put your biggest monthly expenses on the cards with the best rewards programs.  Good work paying off the first seven, and keep up the good work until all are paid off!

chucklesmcgee

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Re: What to do with the credit cards we have paid off already?
« Reply #5 on: November 21, 2012, 11:06:58 AM »
Your credit score is based, at least partially, on the amount of available credit that you do not use.  If you can withstand the temptation of using these, and they do not charge any annual fee, you could simply put them in a safety deposit box and let them gather dust. 

Of course, if you never intend to take out another loan in your life, then you could destroy the cards since your credit score would have relatively little impact on your future life.

+1 to this. Keep them around to help your ratio of available credit used - in a safe, if needed.

+1. It's also based on the average age of your accounts and the age of your oldest account, so closing these if they're old could be extra bad. Some card-issuers might inactivate your account if you don't use it once a year or so, so you might want to dust off the card every now and again to make a small purchase, then pay it off.

James

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Re: What to do with the credit cards we have paid off already?
« Reply #6 on: November 21, 2012, 11:16:54 AM »
I would keep a couple of the oldest and highest credit limit cards if you worry about your credit score.  I wouldn't keep them all, I wouldn't like having that much paperwork and open accounts to deal with.  If you don't need the little boost to your credit score then close them all.

Regarding what to do with the cards of open accounts, just cut them up.  Safest way to avoid using the accounts, keeps it safe from others who might use or steel it, and you can always order another card if needed.

Mickijune

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Re: What to do with the credit cards we have paid off already?
« Reply #7 on: November 21, 2012, 11:30:15 AM »
Perfect, thank you so much for the information! I had 3 credit cards before meeting my husband, he had 4 store credit cards, and we opened one jointly with 0% for 18 months to pay a specific bill.

We will need to gather them all up, probably close the paid-off store cards since they are low limits and use my 3 credit cards for regular expenses every month and keep paying down the rest. I was concerned about our credit scores for sure...but in the semi-near future, say 2-3 years, I don't forsee us needing to have anyone look at our credit.

We have been attempting to pay everything immediately from checking and it's been such a pain managing payments every week, sometimes payments don't come out quickly so it's a constant review process. Using one card for regular expenses then paying it off in one shot sounds like a much easier plan. And since we pay most everything online, even better! No transferring money between accounts any more!!  It will take some transition and getting used to, trying to stay in within our limit with stuff like groceries, but I'm sure it can be done with a little practice.

I shall talk to the hubby this weekend!


Catbert

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Re: What to do with the credit cards we have paid off already?
« Reply #8 on: November 21, 2012, 01:00:12 PM »
Just remember that credit scores are "individual" and not by couple.  While I agree that store credit cards are unnecessary (and generally have the worst interest rates) if you cancel all the cards held by your husband his credit history will slowly disappear.  Maybe get a general use credit card in his name first.

swiper

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Re: What to do with the credit cards we have paid off already?
« Reply #9 on: November 21, 2012, 01:40:15 PM »
Of course, if you never intend to take out another loan in your life, then you could destroy the cards since your credit score would have relatively little impact on your future life.

That sure is a sweet goal!

NestEggChick (formerly PFgal)

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Re: What to do with the credit cards we have paid off already?
« Reply #10 on: November 21, 2012, 02:24:37 PM »
Congratulations on paying off 7 cards!  I agree with what others have said about keeping the oldest card or two, but I also want to add that while your credit score could take a hit when you quickly close a bunch of cards, it will rebound.  I have closed plenty of accounts over the years.  I now have 3 credit cards (though I really only use one, and it's paid off in full every month) and my credit score is incredibly high.  The point is that if you don't think you'll need that credit score in the near future, don't worry about it.  Just cancel them.  Also, if you have trouble keeping your expenses down when you use the cards, consider switching to cash or using a debit card, at least temporarily until you have new patterns established.  Congratulations again, and good luck with the rest!

Jack

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Re: What to do with the credit cards we have paid off already?
« Reply #11 on: November 21, 2012, 04:01:59 PM »
While I agree that store credit cards are unnecessary

Occasionally store credit cards have useful perks. For example, I got a Lowe's card because it gives 5% off. You'd have to be an idiot to carry a balance (the interest rate is a usurious 25% or something), of course. But I buy enough at Lowe's that it's worth the hassle of the extra account.

sibamor

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Re: What to do with the credit cards we have paid off already?
« Reply #12 on: November 21, 2012, 05:13:50 PM »
Lifehacker.com had a nice little article on this earlier.

http://lifehacker.com/5961899/secrets-of-the-800%252B-credit-score-club

The basic answer is utilization rate.  The short version is the amount of available credit you have should be 2-3x the size of your monthly expenditures.  So if in a given month you charge 2k on a credit card and pay off in full then you should have between 4-6k in available credit.  Whether you have this on a few cards (I personally would never go more than 2 major and 1 store card) or more is the logic.

I agree get rid of several of these zero balance cards. Keep the best 2 cards of all 10 of them in the end.

Mickijune

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Re: What to do with the credit cards we have paid off already?
« Reply #13 on: November 21, 2012, 05:43:00 PM »
The three credit cards left are my husband's so I doubt his score will go down much by closing the store cards. Plus, they are store cards and don't plan on using them again.

Thanks for the article simabor. I like the idea of only having 2-3x credit available than what we need. We have so much open.

Thanks for all suggestions everyone!