Should I close my credit card accounts when I pay off the balance?

[DreamDelta]

I am snowballing all of my revolving credit card payments and should be debt free, except for my mortgage, by the end of 2011. Should I close those credit card accounts when I pay off the balance? Or will my credit score take a negative hit?

Thanks in advance!

 

[sunnyday123]

Leave them open. You should always have one for emergencies, but closing them doesn't look good. Congrats on paying them down!!!

 

[ziggystardust]

if you have a bunch, I'd say close a couple of them. But do NOT close your oldest card. It adds to your credit score to have a nice long credit history, by closing the oldest card, you are basically erasing that.

I closed 2 credit cards when I paid off my debt, but kept 2 open (including the 2 oldest). My credit score did not take a hit.

 

[DreamDelta]

Leave them open. You should always have one for emergencies, but closing them doesn't look good. Congrats on paying them down!!!

Thanks for the advice!

 

[DreamDelta]

if you have a bunch, I'd say close a couple of them. But do NOT close your oldest card. It adds to your credit score to have a nice long credit history, by closing the oldest card, you are basically erasing that.

I closed 2 credit cards when I paid off my debt, but kept 2 open (including the 2 oldest). My credit score did not take a hit.

I do have quite a few! I plan to keep 1 or 2, but should that include store cards like Old Navy and Kohl's or just major credit cards?

 

[CajunDixie]

Do you still use the Kohls and Old Navy? Do they save you money in % off sales. Will you have the discipline to pay them in full each month? If you shop at Kohls often I can see where it could save you money...IF you pay it off.

Do any of your other "regular" card give you any rewards? Those are the ones I'd keep with your oldest card too.

 

[Pembo]

I closed everything but the Mastercard, knowing that I could save $ if I kept the Kohls. However I didn't trust myself to not overspend. Having one cc has made a world of difference to our debt. Btw-our MC was our oldest card

 

[DreamDelta]

Do you still use the Kohls and Old Navy? Do they save you money in % off sales. Will you have the discipline to pay them in full each month? If you shop at Kohls often I can see where it could save you money...IF you pay it off.

Do any of your other "regular" card give you any rewards? Those are the ones I'd keep with your oldest card too.

I definitely use the Kohl's card, the sales that they have are pretty good and JCPenney's as well, both cards I pay in full every month. Old Navy, not so much.....

I'll probably get rid of all the cards except for Kohl's and JCP and keep the two oldest major credit cards.

 

[dd50]

I would never give up my Kohl's card. Seriously, if you are going to use them and can't pay them off every month I would think about closing some. I would keep about 2 or 3 open and just use them every 3 months to keep them open but don't use all of them in that month, if that makes sense.

If you have many to close I would close them little by little as you won't take such a big hit. They will also stay on for 10 years to help with age but not with utilization.

I have 4 Visa/Mastercards and 3 store cards. I use one Visa or Mastercard most of the time because it has the best rewards and use the others every once in a while to keep them open. I use my Kohl's when you get the discount if you use that card or else I use my Mastercard. I pay in full every month and sometimes let the balance show on my credit report but by then it is usually a really small balance.

 

[libraryfreak]

I don't know about the cards, I just want to say AWESOME PLAN! I've heard that once you see the progress you're making find little ways to make it happen even sooner. Good luck to you!!!

 

[WeLubDeeDub]

Definitely do not close your cards. Just cut up the ones you want to close. Closing the accounts will lower your credit score because your available credit will be lower and your utilization ratio will be higher if you carry a balance on any other cards. Say you currently have a total limit on all cards of $1000 (for numbers sake). If you charge $500 on other cards, your utilization ratio is 50%. If you have a total limit on all cards of $2000 with the same scenario, your utilization ration is now 25%...much better than using half your available credit.

 

[AmberHeartsDisney]

Leave them open. You should always have one for emergencies, but closing them doesn't look good. Congrats on paying them down!!!

You should have a cash emergency fund for emergency's.



This is not a simple answer.Do you need your credit later? Will you be buying another house? Can you "control" your self from using them if they are open?

If you do close them dont do it all at once. That is what effects you the most.

 

[Mary•Poppins]

Personally, I would start closing them. We had various credit cards we opened for free financing (Home Depot) but as soon as we paid them off ... we closed them. (And it didn't affect our credit that much.) We now only have 2 cards to our name ... both Mastercards which get paid off at the end of the month. Perhaps you will take a slight hit on your credit score initially, but I think if you keep paying down all of your debt, your score will rise. JMO.

And, I think getting rid of the temptation to buy when you go to brand name store, is a good thing. Good Luck and congrats on paying off your debt ... it is such a good feeling!

 

[JDUCKY]

Definitely do not close your cards. Just cut up the ones you want to close. Closing the accounts will lower your credit score because your available credit will be lower and your utilization ratio will be higher if you carry a balance on any other cards. Say you currently have a total limit on all cards of $1000 (for numbers sake). If you charge $500 on other cards, your utilization ratio is 50%. If you have a total limit on all cards of $2000 with the same scenario, your utilization ration is now 25%...much better than using half your available credit.

Closing accounts, in and of itself, won't necessarily hurt one's credit score, assuming that utilization is low (the sweet spot seems to be in the 1-7% range).

But, also, it's a good idea to keep multiple accounts open as having all cards show a balance, even if it's $1, can also lower one's FICO score. Having fewer than 50% of credit card accounts with a balance is a way to help optimize one's FICO score.

 

[DreamDelta]

I don't know about the cards, I just want to say AWESOME PLAN! I've heard that once you see the progress you're making find little ways to make it happen even sooner. Good luck to you!!!

Thanks! I've already paid off 3 cards and it feels really good. It's going to be so nice to be able to save half of what I earn! It has definitely been worth the sacrifice!

 

[DreamDelta]

You should have a cash emergency fund for emergency's.



This is not a simple answer.Do you need your credit later? Will you be buying another house? Can you "control" your self from using them if they are open?

If you do close them dont do it all at once. That is what effects you the most.

I've started to build a cash fund just for emergencies so that I won't be tempted to use the credit cards again!

 

[JDUCKY]

How much credit do you really have?
http://www.bankrate.com/system/util...e-1.aspx&s=br3&c=credit cards&t=story&e=1&v=1

One irony for consumers is that a zero balance can hurt your score. That's because the score rewards the individual who can use credit cards but keep the balances low, says Paperno [consumer operations manager for FICO]. "But zero indicates that you are not using your cards," he says.

...

Charge cards that require you to pay the balance in full every month aren't included in your utilization rate in the most recent versions of the FICO score, says Paperno.How to tell which is which: either call the issuer, or pull out that credit report again. If the notation for a card says "revolving," it's a credit card, says Paperno. If it states "open," it's a charge card.

 

[natashag76]

Should I close those credit card accounts when I pay off the balance? Or will my credit score take a negative hit?

No! Do not close your accounts. On your credit reports all it shows is that they were closed, not that you are the one who did it. If you don't want your cards anymore, just cut them up. But keep your accounts "active." Or, a better thing that is good to do, if you can, is only use your cards once every 6 months for something small. It keeps you on the the credit radar, so to speak, your accounts come up as active, but if you're only spending $20 every 6 months, you can't get into too much trouble. By doing this, you are showing the credit companies that there is the potential to make money off of you, so if you need credit in the future (for a house, car, rent an apatment, etc.) you will have a positive credit history.

 

[TobiasFunke]

Absolutely close them. I know popular opinion is not to in case of emergency but that is what a savings account is for. We went through a debt free class last year and by September we paid off over $17,000 in debt and closed our cards. We had some friends who paid off all their debt and kept the cards. Guess what? They have Credit Card debit again because we don't know how to qualify an emergency.

 

[AmberHeartsDisney]

I've started to build a cash fund just for emergencies so that I won't be tempted to use the credit cards again!

Great! save up 3-6 month of total living expenses and your all set