Which credit accounts to close?

Question

My husband has 6 open.

I am thinking of closing the sub-prime ones he has because they charge monthly fees, and fees to use online bill-pay. He has had one called "Credit One Bank" for 12 months and I know they're going to hit up an annual fee soon. The credit limit is $250 on that one. It currently has $146 balance I was going to pay it in full and close. I just don't want this to hurt his credit. He has a 690 score. I just don't think the fees on some of these are worth it. The credit one they're card blows it's even falling apart and he never used it for anything. It seems like a bad company to be with they charge for online access, bill pay, monthly fee of $7, high interest rate, and low credit limit. His First Premier is terrible too but he's had them since early '05 and it helped build his credit so we won't close them.

First Premier - $200 (2005)
Capital One -$500 (2005)
WaMu -$1000 (2006)
Credit One -$250 (2006)
1st Savings -$300 (2006) x2 (he has 2 accts with them both same)

Answer 1

Close only the ones with an annual fee. Actually you really don't want to close any, as doing so may hurt his credit score.

However often if you have zero balance and call to cancel because of the annual fee, they'll waive it to keep you as a customer. If not, cancel them like a stamp.

Answer 2

Most of the credit scoring models only want you to have 2-3 cards. So closing those which charge large fees with little else to benefit is probably the right decision.

The key item is total unsecured credit used to total unsecured credit line. If the total balance is for example $6 (one dollar to each), and the total of all lines is $100 - then the ratio is 6%.

When you are done, try and keep the ratio at or under 15%, or it affects the credit score. Next tranch is at 30%, and again at 50% - each block drops or raises the score about 10 points. There's also a 5% block as the one below which it does not matter - and gives you the best score.

From your list, I'd keep the WaMu and Capital One - total $1500 line. If necessary, transfer some balances to those. Close the dinky ones.

Answer 3

I'd close all those cards except WaMu.

Having TOO MUCH credit can hurt your credit rating. Creditors know that you could decide to run all the accounts up at once, putting you seriously over your ability to repay the money.

Similarly, having dinky-limit cards from carnivorous companies - someone like First Premier or Capital One - won't help.

It's not just your credit score. There are flesh and blood people who look at your credit history when you go to buy a car or a house. Having two cards from reputable companies will show that you not only are capable of repaying the money you borrow, but that you have some sense, and don't fall for every come-on that comes your way.

Answer 4

First of all, get rid of the Capital One card. They are crooks that will screw you in a minute! Definitely keep the WAMU account as this has a higher limit and is from a reputable company. If I were you, I would keep the First Premier (because it's oldest) and the WAMU. I would pay off and close everything else. You don't need too many credit cards.

Answer 5

If your husband has recovered from a past bad credit history and is now in good standing, it would be foolish for you to not consider closing any account that isn't worth it to you.

The credit card companies are not working for your advantage, they are working for their own, so it is your perogative as a smart consumer to choose wisely in what you want to pay for your credit.

My first suggestion would be that if your husband now has restored his credit and you need a credit card, that he start shopping for a credit card that is to his advantage. There are plenty of companies out there that offer low rate cards to worthy borrowers. Start with your bank and see if they will approve you for an account. If not then apply with a major bank like Bank of America or Chase. Look for one that offers the best rate and lowest fees.

If he can get one of those accounts, then ask the new account if they will transfer the balances from his old cards (double check first to make sure that they don't have a higher interest rate on transfers or don't charge additional fees for this)

If he can't then call the companies he has now and negotiate with them. Tell them you are considering closing the account because of the high interest rate and fees and ask them to change your account to a lower rate and no-fee account. If they still won't agree to do that then pay off and close any of them that won't. Those are companies that don't care about keeping you as a customer. Don't be afraid to tell them that you are willing to close the account if they don't give you what you want.

You can also transfer balances on the higher cards to the account with the lowest interest rate (after you have asked them to drop the rate of course).Also, you can pay off the balance on the cards without closing the accounts if necessary, but I would only do that on the cards that don't charge you a fee just for having the account. If it doesn't cost you anything to leave the account open without a balance then do that.

Remember in all of this that credit card is a debt that doesn't do anything for you. It is a convenience, that's it. When it comes down to it, you are gaining nothing from the credit card company for what you are paying them. You should never charge anything to your card that you can't pay off at the end of the month and the best way to use credit it to do exactly that, pay off the full balance owed at the end of every month. You can do that without closing the account, and it will not hurt your husband's credit one bit. Lowering the balances on the accounts will only serve to improve his credit.

Answer 6

Transfer all the balances to one card. There are many that offer 0% interest and no fees. Then close all except the WaMu. At that time start paying down the balance. Depending on his income his debt to income ratio should be good which will help boost his score

Answer 7

I would probably close the ones with annual/monthly fees.
The one thing that might help your credit score itself is if you had a credit card with a higher limit. These small credit limits show that you're not really trusted by these companies - and your credit scores might be higher if you had a card with a higher limit.
Just be sure to keep your remaining cards at below half balance, that shows companies you have credit cards but you don't NEED them, you're not over extended basically.
Maybe see if 1st savings will combine the 2 accounts into one?

Answer 8

Close the ones that are charging fees to use online banking for one. Since the score is already 690, it won't hurt to close some. The annual fee you can do without so close that too.

Answer 9

You only have 2250 dollars on those cards. Why don't you live the American dream and pay those cards off and close them. Everyone talks about getting out of credit card debt but you are in a position to get that monkey off of your back in a quick fashion. Sure you may take a hit in your number but there are so many references there that you will probably be able to get any card that you want.

But what important is getting out of debt and spending more time with each other and building your net worth instead of spending time paying six different credit accounts. You are poised to start living debt free, go out and do what everyone else is only talking about.

Answer 10

I would keep open the ones that don't have any fees associated with them. So the ones with no fee that you keep open....he doesn't have to use all of them...just don't cancel them or it will hurt his score even more. So many companies offer cards with no annual or monthly fees, that it is not worth it to have to pay to have a card.

Cancel the rest of the cards with fees...it will hurt his score by closing them...but overtime he can build it back up.