I need some advice with credit card?
Posted on Jun 08, 2007 with Comments 3
I need advice on which cards to keep and which to close In total I have 7 Credit Cards I know for sure I want to close two of them out but would also like to know if I should do anything to the others
I have the following Cards,
Bank of America Platinum Plus, using $70 of 2,300, opened 06/07
Sears (Blue), using $350 of $1,100, opened 12/07
HSBC, 0 of $300, opened 03/08
Capital One, $100 of $750, opened 03/08
Sears MasterCard, 0 of $1,000, opened 07/08
Target, 0 of $200, opened 09/08
Sam’s Club Personal Credit, $70 of $500, opened 11/08
I also have a student loan out that deferred for $7,000
I plan to close out HSBC ( they wanted to charge $10 for a credit line increase of $100 they also have an annual fee and I think the most they will do is cut it in half) and Target because of their low credit limit and I really don’t shop at Target, just used it to get a 10% discount on some present for my mom. I don’t want to close out sears (blue) because I bought a TV on it and its interest deferred until august (I should have it paid of by april). Capital one is interest free for a year which is about to end, think I could get them to give me a good credit rate?
Do you have any suggestions for me I don’t want to open any more credit cards any time soon.
My credit score is a bit out of whack, credit companies Always report to the credit agencies when I have a high balance with them, which I think is unfair, hopefully I get lucky this upcomming report. Suggestions with that as well would be appreciated. Thank You very much for your suggestion.
P.S. I use Bank of America Privacy Assist to check my credit report it updates every 3 months. I still have money over from my student loan (I was going to use for a down payment on a car) should I use that money to pay off all the debt or should I continue doing it the way I am now, I made a budget off all my credit cards and I should have every thing paid off by february, except the sears card.
Glendora Grado
Filed Under: Personal Finance
Keep the card you have had the longest.
A long credit history is important.
Keep in mind that 60% of the population pay their credit cards in full each month. Don’t be a slave to paying interest to banks. Carrying balances does not increase your rating – it can actually reduce it if you ever go over that 30% of available credit.
I open and close accounts all the time for their discounts. I does not harm your credit that much and its only temporary.
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I just watched a program on TV: “Maxed Out: Hard Times, Easy Credit” I highly recommend it. The FICO score algorithm is classified by the credit card companies. So, anything you do, will affect your credit score to the negative. All of your credit cards are less than 18 months. You have a potential debt of about $6,100. Although you have very little debt against your cards, the potential is there. The credit agencies can change the rules and say that your potential credit card debt is too high vs your income, so they’ll reduce your FICO score. If you close out your credit cards, they’ll reduce your FICO score. If you apply for and get another credit card, they’ll reduce your FICO score. They’ll use any excuse to reduce your FICO score. If they can’t, the bank will reduce your credit limit. That will raise your credit balance to max limit percentage, raising your interest rate and reducing your FICO score.
Dump the HSBC card. Charging you to possess the card is added interest on your debt. Who want’s to pay interest on $0.00 balance? It’s stupid.
Dump all the cards except one VISA or Master Card. You only need one. They are accepted almost everywhere. The Target cards is only good at Target stores. The Sears card is only good at Sears (and K-mart) stores.
I don’t have any credit cards (not since 1988). Haven’t needed them. Still was able to buy a home in this tight credit market. I honestly believe that a respectable income, low (or zero credit card debt) and respectable savings balance has a more positive effect on your FICO score (mine was over 800.
Don’t use the student loan for anything other than for its intended purpose. Save other money to buy the car. Pay off your credit card debts with your normal income.
Definitely close any card that charges you an annual fee. There are plenty of cards that charge no annual fee and still offer rewards, so don’t waste your money.
Then close the newest cards and keep the older cards. Your credit history looks at how long you’ve successfully managed credit, so newer accounts aren’t as positive as older accounts.
However, you should also consider the rewards each card offers. If you shop a lot at a particular store or really need airline miles, then you might want to keep that card instead of an older account that offers no rewards.
Interest rate is another important factor to consider, but you can avoid this by always paying the full balance every month. Don’t use your credit cards to defer payment on an item – instead, build up your savings first and then purchase the item.
The credit limit isn’t quite as crucial. Your credit score depends on the amount of credit you’re using compared to the amount of credit you’re offered. So it doesn’t matter if you have ten cards each offering $1000 limit or one card offering a $10,000 limit.
Definitely ditch the Sears and Target cards. Unless you shop at Sam’s a lot or it offers really good rewards, ditch that too. Ditch HSBC because of the annual fee.
Keep the BofA card unless they charge a fee – it’s your oldest account with the highest limit. Use this as your primary card, and keep one or two others as backups. Focus on accumulating rewards on one card instead of waiting to rack up smaller rewards on multiple cards.
Also, go to your local library or bookstore and pick up some books on personal finance. Suze Orman, David Bach, and David Ramsey all offer sensible, inspiriational advice on getting and staying out of debt, and on budgeting and amassing wealth.