General question about credit cards

[Whittio]

I hope someone here can help me figure out the best thing to do.. I hope this is the right place.

I originally came to this forum to file BK for my mom. (she has her 341 meeting in less then an hour.. I am so nervous!!)

Anyway, upon looking at my own financial situation my husband and I decided the best thing to do with all our cc debt was to consolidate and move it onto our equity line of credit. This will simplify things and lower our interest rate considerably. (only 5.5% I think, vs 17% on some cards)..

So.. we increased our equity line of credit and this weekend, I paid all my cc bills (some still have small balances which I am paying today the collected interest I guess?)

My question is this. With everything paid in full, I want to cancel them. Is that a good idea? Or should I just destroy the cards and leave the accounts open? I know I don't want/need the temptation of the cards. I will keep my small one that I use for business, I must have that, but it's only $1000 limit and I pay it off 3 times a month (Google ads and customer purchases). But we have 4 others they are:

Discover card $10k limit
Bank of America $10k limit
Citibank $18,500 limit
Capital One (husbands card) $15k limit I think?

I know there are places that don't take Discover, so I could easily cancel that one. The Capital One was only opened to transfer balances to, but then the 0% ran out and we transfered everything to the BofA (who screwed us on the 0% interest deal).. so I am thinking about leaving my small Citibank and the big Citibank.

We are going on vacation next week for 11 days, and we WILL use the card, but once we get home, we'll pay the balance with the equity line as well.

Any thoughts on what I should do?? Thanks!

[StaciMM]

I think it all depends on what your objectives are... Since you already have a home-I assume you won't be applying for a mortgage anytime soon. Closing the accounts may have a negative impact on your credit score though it couldn't do TOO MUCH damage I imagine!

[Whittio]

Yes we have a mtg, but our house is for sale, and if we sell it, we'll walk away with $300k cash after EVERYTHING is paid off. We'll take that money and move to TN where we can afford to buy a home outright for ourselves, and one for my mom to live in. So we might need SOME credit down the road, but maybe not right now?

The thing I worry about leaving them "open" is identity theft? Is that something I should be worried about? I mean, having $30k in credit just sitting out there for someone to steal scares me.

[StaciMM]

Can't help you on the identity theft issue. I don't think anyone would want my credit, LOL, so its not an area I've put much thought into!

No one can seem to give an absolute answer on the how's and why's of FICO, though having accounts paid on time, using only a small amount of available credit, and having old accounts seem to be big factors. Perhaps close one at a time & test the waters?

[Whittio]

Thanks! I think I'll destroy the cards now, and just leave the accounts open. I don't see how having them open/unused would help my credit. They should want to see usage, but paid balances too.

[Minnymouth]

Whittio,
I myself closed all accounts but one credit card to keep for usage occassionally and for emergencies only...... Use is enough to keep it active and credit score building...

I'm like you, all that excessive credit limit available is a good "incentive" for identity theft....... (they could do it so quick and you'd never know till it was too late.....)

I had high available balances also and did away with all of them....except the one

Also have extremely high available credit limits has a tendency to ruin your credit also...... some companies consider that as being overextended - even though you are not using it.... its still available to you.


Minny

[spooby72]

Spooby72

I would not recommend closing your high credit limit accounts. It can lower your scores more than you think. I closed 30k in credit cards after a home sale three years ago and it lowered my score almost 50 pts.

[Whittio]

I am so confused! Both ways seem to have value. I close them so I don't look "over extended", but if I don't HAVE credit, I can't build credit..

I know we won't use them even if I leave them open. So does that do any good having them then?

Here's another potential problem. If we sell our house and pay everything off, and pay cash for another house.. we won't be building ANY credit then right? So will our credit scores stay the same, or increase?

My husband has ONE card in his name, has never had any other credit except our house. So his score is lower then mine. I added him onto the card I plan to keep/use, will that help his score, or should I put myself on HIS card and plan to use that one?

[Minnymouth]

I was looking at all the available credit you have - approx $53,000......thats a lot of available credit for "identity theft" to use...... way too much.....

Suggestion - keep two cards, one for you and one for husband. Use them occassionally, payoff monthly.... help to build and keep good credit score.

Eliminate the others......cut up and close out..... I don't believe that eliminating these others will affect your credit score very much..... But it will eliminate the "look of being over extended" with available credit...

Just a thought,

Minny

[StaciMM]

I always thought the concern w/ identity theft was someone using your info to open up accounts in your name & running them up. If someone did that, and the statements went elsewhere-you wouldn't know until you got a copy of your credit report or creditors started hunting you down for things you don't know about.

I doubt anyone could access your existing accounts and even if someone did, you would see odd charges on the monthly statement.

[Whittio]

Again, both very valid thoughts. :s

I think I will close out at least one for now. The Discover card I don't need to use at all. I used to use it all the time because I got cashback bonus, but their bonuses suck now, and I had $23.00 the other day, so bought another $25 gift card to Starbucks for our vacation. So that's done with.

Now I did also shred the BofA cards. I hate them! They screwed me because I moved everything over to a 0% interest, they sent the bill to the wrong address, I hadn't gotten a bill, so I called and found out I was like 3 days LATE, so they added a late charge, which sent me over the limit, so added an over the limit charge too.. and then they took away the 0% interest. All because the bill was sent to my street address (which we don't have delivery out here) instead of sending it to my post office box. I tried to reason with them, but they wouldn't hear it. made me mad.

So at this point, I have my business Citicard with $1000 limit. I have my other Citicard with $18,500 limit, and then we still have my husbands Capital One card. Maybe I need to be added onto HIS card, so we can build up HIS credit? Or maybe I should only keep the card with the lowest interest rate? (although we don't plan on using any except for emergencies).. the business one will get used a TON!! I rake up about $500 in advertising costs alone on that one every month, and if anyone has any orders, I have to put it on my card, and they pay me. so that will be doing great for credit for me)

[Printer099]

You can always not cancel them but just cut them up so u cannot use them ,

[Genenco]

So at this point, I have my business Citicard with $1000 limit. I have my other Citicard with $18,500 limit, and then we still have my husbands Capital One card. Maybe I need to be added onto HIS card, so we can build up HIS credit? Or maybe I should only keep the card with the lowest interest rate? (although we don't plan on using any except for emergencies).. the business one will get used a TON!! I rake up about $500 in advertising costs alone on that one every month, and if anyone has any orders, I have to put it on my card, and they pay me. so that will be doing great for credit for me)

One thing to remember (I found this out recently) is to get a "Crosscut" shredder (I believe it cuts it into small squares) and use it for all or any correspondence, with any CC.

IN my area, two families were nailed by indentity theives and used a regular shredder...Now people are suggesting doing a "Double pass" if you have a regular shredder...

[sunshine08]

Just a thought, keep half, the ones with the best interest etc. THe ones you don't plan on using put in safety deposit box or get a small safe (that needs to be bolted down, incase someone breaks into your home) Keep the numbers etc. in a separate palce, so if they get lost or stolen you can immediatley cancel them.
an identity thief needs at least one of two things: your personal information, i.e. dob, ss# etc. or the physical card. If they don't have both, it is almost impossible. If you cut up the cards and need to use that open line of credit then you will have to call the company and have them send you another card.
Safety deposit boxes and safes are a good idea for storing important documents, jewelry, and your cards. It would be worth the investment.
Many places now request id when using the card. Alot of internet purchases require more information, like the # on the back to use it. Also if used on the internet for purchases they want a billing address.

[Whittio]

Thanks guys. I do have a cross cut shredder.. and even bought my mom a shredder this year for her birthday because she was tossing out "stuff"..

I did shred most of the cards, and ordered a card for my husband on my account. I don't want too many accounts being used, like the other day he needed an inter-tube for my daughters bike, so he didn't want to stand in line and ONLY buy the inter-tube, so he bought a kickstand too.. well, there's $8.50 on a separate cc. If he charged that on MY account, I would pay it off when I pay everything else off.

He did that recently, didn't tell me he bought something, I didn't look at the bill because I knew I had paid it off.. and then got charged $37 for a late charge on a $25 charge. That made me mad.. so I know we need to use the same account if nothing else.

I'll leave everything open for now, and cancel them one at a time maybe?