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The Family Piggy Bank The Family Piggy Bank

What to do now

Posted by on Jun. 21, 2013 at 4:35 PM
  • 18 Replies
I am so extremely pleased to say we started out with 9 credit cards. Today we paid off number 7. 2 more will take a few more months.

What do you do after they are paid off? We don't ever ever ever want to get in to debt like this again. So my thought was cut them up except the two we have left. We can keep those but what about the rest?

My husband is against it because he thinks it will hurt our credit if we don't use them and they get closed. But I would really rather not have any cards and pay with cash from now on. Sure we need credit to buy cars in the future or a home if we decide to do that. But will it really hurt us that much not to use those cards ever again?
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by on Jun. 21, 2013 at 4:35 PM
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Replies (1-10):
katherinemcp
by New Member on Jun. 22, 2013 at 7:18 AM
There's two schools of thought. (: if you close them, your score will/may drop. Many people have them paid off but leave the accounts open because it shows a large amount of available credit, thus helping your score. Other people pay them off and close the accounts- their score may drop but they don't care because they say they will only ever pay cash from this point on. But they are commiting to cash for cars, rentals, homes, everything. If they were to want to make a major purchase, like a house, with no score, they'd have to rely on manual underwriting. So I think it depends on your preferences.

Personally, I am paying off my cards, but leaving the accounts open. My husband had lousy credit before we were together and we want to have a good score in case we need it for vehicles, etc. Hopefully we'd be able to take the cash route, but you never know! Also, my hope is to have our balances paid off, but to get a rewards card for Costco purchases that gets paid off monthly as part of our budget. I won't do it until we do 'the dirty work' and pay off our balances though. (:
momof2ex1
by Member on Jun. 22, 2013 at 11:29 AM
I don't necessarily want to close the accounts I just don't want to use them. Is it true that if you don't use them they get closed? Maybe if we periodically use them and pay them off every single time they are used that would help to keep them open? My fear is that we have a spending problem. We make good money and we live comfortably. We like things. I fear we will over spend if we even use them at all. But I know we need one for emergencies and just in case. You just never know! I just don't know if we can keep them open if we never use them. Thanks for your reply!


Quoting katherinemcp:

There's two schools of thought. (: if you close them, your score will/may drop. Many people have them paid off but leave the accounts open because it shows a large amount of available credit, thus helping your score. Other people pay them off and close the accounts- their score may drop but they don't care because they say they will only ever pay cash from this point on. But they are commiting to cash for cars, rentals, homes, everything. If they were to want to make a major purchase, like a house, with no score, they'd have to rely on manual underwriting. So I think it depends on your preferences.



Personally, I am paying off my cards, but leaving the accounts open. My husband had lousy credit before we were together and we want to have a good score in case we need it for vehicles, etc. Hopefully we'd be able to take the cash route, but you never know! Also, my hope is to have our balances paid off, but to get a rewards card for Costco purchases that gets paid off monthly as part of our budget. I won't do it until we do 'the dirty work' and pay off our balances though. (:

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kelligirls2
by New Member on Jun. 22, 2013 at 11:41 AM

You want to leave them open, cause, yes, when you close the CC it show's a negetive on your credit.  Keep one that give's rewards or points towards something.

  It's always good to have an emergancy CC, most of our lives are on-line and you can't pay cash thru the computer to get that hotel roomstick out tongue mini! (for example).  If you are too tempted, keep only one, cut up the rest.

Again, call the CC company to see about reward or airline miles or some kind-of bonus for using it, and PAY OFF THE BALANCE ANYTIME YOU USE IT!

Just my 2-bits ;)

momof2ex1
by Member on Jun. 22, 2013 at 11:45 AM
Thank you! Well I don't want to close them I just don't want to use them. Is it true if you don't use them they will close them? I've never had one closed by the creditor so I'm not sure how that works.


Quoting kelligirls2:

You want to leave them open, cause, yes, when you close the CC it show's a negetive on your credit.  Keep one that give's rewards or points towards something.

  It's always good to have an emergancy CC, most of our lives are on-line and you can't pay cash thru the computer to get that hotel roomstick out tongue mini! (for example).  If you are too tempted, keep only one, cut up the rest.

Again, call the CC company to see about reward or airline miles or some kind-of bonus for using it, and PAY OFF THE BALANCE ANYTIME YOU USE IT!

Just my 2-bits ;)


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kelligirls2
by New Member on Jun. 22, 2013 at 11:52 AM

The only CC company that closed my card because of non-use was American Express.

I don't think any of the other ones bothered, they just keep sending balance transfer offers cause they were still open.

katherinemcp
by New Member on Jun. 22, 2013 at 4:59 PM
The lady at funcheaporfree.com has some great tips for budgeting using credit cards and paying it off every month.

I do think you occasionally need to use the card, just don't do it unless you've already allocated the money for it to pay it off. (:


Quoting momof2ex1:

I don't necessarily want to close the accounts I just don't want to use them. Is it true that if you don't use them they get closed? Maybe if we periodically use them and pay them off every single time they are used that would help to keep them open? My fear is that we have a spending problem. We make good money and we live comfortably. We like things. I fear we will over spend if we even use them at all. But I know we need one for emergencies and just in case. You just never know! I just don't know if we can keep them open if we never use them. Thanks for your reply!




Quoting katherinemcp:

There's two schools of thought. (: if you close them, your score will/may drop. Many people have them paid off but leave the accounts open because it shows a large amount of available credit, thus helping your score. Other people pay them off and close the accounts- their score may drop but they don't care because they say they will only ever pay cash from this point on. But they are commiting to cash for cars, rentals, homes, everything. If they were to want to make a major purchase, like a house, with no score, they'd have to rely on manual underwriting. So I think it depends on your preferences.





Personally, I am paying off my cards, but leaving the accounts open. My husband had lousy credit before we were together and we want to have a good score in case we need it for vehicles, etc. Hopefully we'd be able to take the cash route, but you never know! Also, my hope is to have our balances paid off, but to get a rewards card for Costco purchases that gets paid off monthly as part of our budget. I won't do it until we do 'the dirty work' and pay off our balances though. (:


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QuiltLover
by Jocelynn on Jun. 22, 2013 at 5:01 PM

When we paid off everything, we closed them....you can use your debit card as a crdeit card to get a hotel room reservation, if my credit dropped, we never knew it...our mortgage, small one, interest is only 3%, and when we inquired about a car loan, didnt use it, just inquired, our credit score was as high as it can be,,,excellent, so paying them off and closing the credit didnt hurt us at all.Just for your information.

momof2ex1
by Member on Jun. 22, 2013 at 5:26 PM
Thanks for the information. I don't really want us to have as many cards open as we do. It's too much to stay on top of. We've had a rough time. We needed them. I went through a divorce and brought some baggage to my new marriage. Then we were trying to get on our feet. My husband has excellent credit so he had cards that were low interest and no balance. But we hit a rough patch and had to use them. Now I just don't want to ever do that again. I am so proud of us for sticking to the plan. Paying it off. I don't want to go down that road again. It's too much paperwork lol


Quoting QuiltLover:

When we paid off everything, we closed them....you can use your debit card as a crdeit card to get a hotel room reservation, if my credit dropped, we never knew it...our mortgage, small one, interest is only 3%, and when we inquired about a car loan, didnt use it, just inquired, our credit score was as high as it can be,,,excellent, so paying them off and closing the credit didnt hurt us at all.Just for your information.


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HIJKLM
by Member on Jun. 22, 2013 at 5:32 PM
It can hurt your credit to close several accounts at once. The more available credit you have (even if you're not using it) the better your credit is. You could cut up the cards but not close the accounts then if you chose to you can reorder a card later or keep them, only charge what you can cover with cash, pay it off within 25 days of the charge (they can't charge interest if its paid before 25 days) and keep your lines of credit in good standing.

Congrats on clearing up your debt, I know it's a great feeling!
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HIJKLM
by Member on Jun. 22, 2013 at 5:41 PM
It may depend on your available credit and the amount of time between closing the accounts and checking your credit score. My MIL took the advice of a friend who told her to close all her credit accounts when she was looking to buy a home. Prior to closing the accounts her score was near 750. After closing them it dropped to around 650.

I would suggest checking your credit score before doing anything. Most sites have a slider to see what your score would be if you added or removed accounts (I know freecreditreport.com does). I wouldn't base my financial future on one persons experience. Find out for yourself how it will affect you.


Quoting QuiltLover:

When we paid off everything, we closed them....you can use your debit card as a crdeit card to get a hotel room reservation, if my credit dropped, we never knew it...our mortgage, small one, interest is only 3%, and when we inquired about a car loan, didnt use it, just inquired, our credit score was as high as it can be,,,excellent, so paying them off and closing the credit didnt hurt us at all.Just for your information.

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