question with credit cards

iVillage Member
Registered: 12-23-2005
question with credit cards
7
Thu, 11-01-2012 - 4:27pm

I have been working very hard on paying off credit card debt I am close to getting some of the many I have payed off do you cancel all of them as you pay them off or what do I do ? I am thinking cancel them so I never have to worry about them again but then again is it going to make my credit even worse!  Thanks for any advise Mandy

iVillage Member
Registered: 11-14-2008
Thu, 11-01-2012 - 4:52pm

Don't close them. It does affect your credit rating. You can still get rid of the cards--just don't close the accounts. Forget about them or give them to someone you trust. Good work paying down the debt!

iVillage Member
Registered: 12-23-2005
Thu, 11-01-2012 - 5:04pm

Thanks for the response I have an excessive amount of credit cards I am embarassed to say between me and my husband we have 12 which we have been working very hard and should be payed off by sept of next year so excited to say that! My husband has picked up a side job laying carpet which brings in an extra 15-20 thousand a year which has really helped!!! Can't wait to have that debt off our shoulders.  Mandy 

Community Leader
Registered: 08-25-2006
Thu, 11-01-2012 - 5:14pm

Yea, generally speaking it is my understanding that closing CC's can actually lower your FICO score.  Because then you have a different debt to available credit ratio. 

The only exception, in my opinion, is if a person is a compulsive spender or shopper, or what have you.  For example, if you went to a Debtors Annonymous meeting, chances are you would be told to close the cards, as a FICO score would not be a priority, it is a persons spending that would be the issue at hand.  You can use those card numbers to shop and spend on-line, so cutting them up is useless if you have a true problem.  They would have to be closed. 

If you did decide to close some for the purpose of avoiding any temptation and you have time to let your FICO score build its way back up, you may want to close any high interest store cards.  They usually have a low limit and really are pointless to have. 

I know that you would also want to look at the limit of each one, and how long you have had each one.  In general, I think you would want to keep any long standing and/or higher limit CC's open.

Hope that makes sense. 

It is a catch 22, because having a ton of available credit isn't always good, either.

Congrats on getting your debt down.  I hope you keep posting. 

Serenity

 

 

Serenity
iVillage Member
Registered: 12-31-2010
Fri, 11-02-2012 - 1:56pm
  1. Mandy -
  2. Don't feel too bad, my husband and I have over 20 accounts open.  We keep the cards in a safe at home, but the accounts are open.  Once every two years we take out a card, charge something, then pay it off immediately through online bill pay or right at the checkout. 
  3. Your score is a partially made up of how much credit you have AVAILABLE to you.  The companies figure if you get into trouble, loose a job, etc. and don't have money, you can always resort to a credit card.
  4. NOW, if you are a Dave Ramsey follower or other, they will tell you credit scores do not matter because if you live debt free you don't need credit so you should close all accounts.

So it depends on your POV on the issue as well.

Bottom line GREAT JOB paying things off.  Saving for retirement now???

-Marie

#Marie
Avatar for mahopac
iVillage Member
Registered: 07-24-1997
Fri, 11-02-2012 - 2:39pm

Mandy, congratulations on working so hard to pay off the debt!

I paid off mine through a DMP (debt management plan), and as part of that, many of my accounts were automatically closed as a condition of the DMP.  Eventually I closed almost all the rest myself.  I think we had 8 credit cards, now we have only one Visa and an old-fashioned Amex.  We also have a $2000 line of credit and a $44,000 HELOC with my credit union which have had zero balances since 2008. 

I felt it was worth my peace of mind to just be rid of those dreadful reminders of my past financial irresponsibility.  The worst my credit rating ever got was the mid-600s, back in 2005 when we were buying our first house, so I didn't get the absolute best rate but I still got a 5.625% mortgage.

I checked our rating when we refinanced our house this past summer, for 3.125%, and we were in the high 700s.  The only ding is that we don't use enough credit, LOL!

iVillage Member
Registered: 07-06-2003
Fri, 11-02-2012 - 7:28pm

As the other ladies have said, it's not a great idea to cancel the cards especially your oldest ones as it will negatively affect your credit score.  You can also ask the cc companies to reduce the limits on some and then either put them away, or cut them up or freeze them :)

Congratulations on your payoff success! 

Kassandra

"It is said that life has its peaks and valleys.  The challenge is to accept them equally and experience them

iVillage Member
Registered: 12-17-2012
Tue, 12-18-2012 - 3:25am

Hey mandy, i would like to give some advices to pay off your credit card debt:

1.Choose the credit card with the highest APR, and focus all your energy on paying this card off. When you have extra money, it should go into payments on this card. When this card is cleared, cancel it or lock it away, and turn your attention to the card with the next highest APR.

2.Make regular payments on the other credit cards. Try to make more than the minimum payments. Making only minimum payments means that you pay two or three times the amount you originally charged in interest fees alone.