My parents were encouraging/pressuring me to cut up all of my credit cards except "2 or 3 major credit cards," as they put it. "If you cut them up you won't be tempted to use them." Well, I compromised by cutting up one of my duplicate Chevron cards (2 cards for one account), which was a bit sneaky of me. But then I actually cut up four cards I don't want to use anyway: My smaller Texaco card, limit $200 CITGO card, limit $850, hard to use Providian MC, limit $1400, $59 annual fee Household MC, limit $300, $59 annual fee Anything with an annual fee I intend to close as soon as possible, i.e., as soon as I pay it off. CITGO I intend to keep open even when paid off, simply to help my utilization ratio. Texaco I intend to keep open to help my average age of accounts. I already had to close my Associates Visa (limit $500) to avoid a higher interest rate. So now I only have 16 cards left that I can use. I guess it's worth it to get out of debt sooner.
Sounds good. I suppose if you have another 16 cards, you don't need these. I am curious though, why are you waiting to close those accounts until they are paid off? You could just as well close them now and continue to pay them off even after they are closed. Payment terms are still the same. Only things that disappear are your available credit, and most fees (e.g. annual fee, membership fees.)
btw, being sneaky is what made me today owe $15k in cc debt... you can read all about it when i write my book heh
(1) I'm not sure about these specific cards, but I have read account agreements that indicate that annual fees continue even if the account is closed, as long as there is a balance. (2) Paying these cards down can actually help my utilization ratio, so I want to leave them open at least until the next annual fee approaches.
I did this a while back. I cut up most of my credit cards. It worked really well as I then paid them down a lot and when I decided to start using them again, I just had them send me a new card. Great way to stop impulse buying...lol. L
That's true; it is a great way to stop impulse buying. My other method has been to carry very few credit cards with me, and keep the rest in a drawer. I only pull a card out of the drawer if I have something in mind. However, that method merely shifts the problem from impulsive buying to obsessive buying.
Yes, this is true. Capital One did this with a card I cancelled with them. Kept charging me the annual fee until my balance was zero. Also, be careful with Orchard Bank. I closed a Visa with them that I still owed money on and they raised my APR to 29%!!! Never late, never over...they called it some sort of "monthly administration fee" because the account was closed and had a balance. Luckily I only owed them $600 so I paid it off ASAP. 29%...geez, you could get better rates from the friggin' Mafia!! Different repayment terms though....
We got an offer from Household that says if you close an account with a balance there is a $3.50 "Monthly Maintenance Fee"
To curb impulse buying on credit, take a plastic container, fill it with water, and put your cards in it, then put it in the freezer, and freeze it solid. That gets you some thinking time, even if you cheat on the thawing out, it give you time to think about what you're doing.
Another way to curb impulse buying is to go out and charge $16,000 on credit cards and then make the minimum payment for the next 8 years trying to pay it off (and realize that you're not getting anywhere)! That's how I learned anyway...the hard way!! Actually, your idea is a good one...it would definitely make you think about what you were doing while the ice was melting...good one. Thanks.
Yep...learned that the hard way. I'm just glad my balance was only $600 and not $6,000. Man, could you imagine $6,000 at 29%...whew, that would take forever to pay off!!
I have kept my accounts open when I chopped up the card, until I pay them off completly to save my utilization. 30% of FICO is based on utilization it what I have heard.
also some credit cards will raise your interest rate once they are closed out...especially if there is a balance owed. They may also charge the yearly fee...read your agreement completely. I have not one CC that has a annual fee. I refuse to have to pay for use of their cards! I also keep all my cards in a drawer in my desk. I keep my checkcard (linked to my checking acct) and that is all in my wallet. I then can't go out shopping for the heck of it. I too heard about putting your CC's in water in the freezer. Haven't tried it. I consider myself really good at not overspending. I learned my lesson after my bankruptcy 12 yrs ago! Now if only I could get rid of some inquiries on my CRA's I'd have good credit scores LOL
