Card Strategy

[acm11811]

Hello! I'm new here and am so thankful this board exists (my co-worker recommended it because it's helped her so much). My question is not related to Disney... I hope that's okay!

My credit score is currently in the "good" range and I would like to start improving it by making some changes to my credit card situation. I have two card accounts-- one I opened with my local credit union 15+ years ago and the other I opened with an out of state credit union (when I lived there) 10+ years ago. Since I'm no longer able to make payments on the second account in person I'm charged a $5 debit card transaction fee every month, which I don't love. Before I take the actions outlined below I would love any feedback and/or suggestions anyone is willing to provide. To reiterate, the primary goal is to improve my credit score. When I can (most of the time) I pay off both cards every month. I'm single, don't have a mortgage and the only other line of credit I have open is for my auto loan.

Action 1 - Extend credit on first card
The current line of credit on my first card is pretty small ($1,000). How much would you recommend extending it? There are no "perks" associated with this account but I assume I should keep it open since it's my oldest.

Action 2 - Close second card
The line of credit on this card is the same as the first-- $1,000. How much of a negative impact do you think closing the second account will have on my credit since it's been open for over 10 years? There are no perks associated with this one either and I would rather not continue paying that pesky $5 a month (adds up fast!).

Action 3 (Tentative) - Open new card
Assuming extending credit on the first account, closing the second account and opening a new account would be too much activity at once how long do you recommend waiting to open a new account or could doing that potentially offset the negative impacts associated with closing the second account?

Thanks in advance-- truly appreciate it!

 

[Jml813]

Is there a way you can set up automatic bill pay on the credit union account to avoid the fee? Most companies allow you to do an ACH or mail a check to avoid fees for payments.

 

[Anthony1971]

No idea what you may or may not qualify for however I would try to open an account with rewards such as Chase Freedom there are 2 different ones with the unlimited having 1.5% back on all purchases. The Flex as it is now known has 1% but bonus cat. for 5%. If you do not qualify maybe try Discover. I prefer Chase as there is usually a local branch that you can pay at I do not suggest mailing and credit card payment as late is late is late period no matter if you mailed 3 months or 3 days before the due date.... Otherwise you can do an ACH with either. Credit is based on you paying on time and the only way to build credit is to charge and pay ON TIME and not finance..... You will not truly have great credit until you have Mortgage. Car financing can help as well but this is not an excuse to buy a car but if you do one you can afford and make sure the payments are on time..... I have never bought into Closing will hurt... The only reason this would be the case is if you have 2,000 total credit and you spend 1,500 a month on credit pay on time every month close one you then only have 1,000 in credit and you really never want to max a credit card every month..... But if you are paying it should be no harm either. Also no card will really increase your line without asking and reviewing. Sometimes opening a new card you will find your limit is a lot higher.

 

[CAPSLOCK]

If you're not getting perks on the "keeper" card, I wouldn't bother extending its credit limit. Keep it open and use it a few times per year so it stays an active account. Get a new card with perks; many come with bonuses if you meet certain spend amounts within a set time frame and/or no interest for the first X months.

As soon as you're officially offered a new card, then drop the fee card. As I understand it, credit scores only care about your longest card and your total credit limit, they don't care the ages on any other accounts.

2 months ago I got a Wells Fargo card with 2% back on everything, $200 bonus after spending $500, and no interest for 15mos. I immediately put a big plumbing bill on it and already got the $200 bonus. Now I can pay off that plumbing bill slowly (and the Universal APs that I got early in case of a price increase...). It'll all be paid off within the 15mos, so I will never pay a dime in interest.

Frankly I put everything I possibly can on a credit card, because of the cash back rewards. Even a few dollars back a month is more than I'd have gotten paying cash. As long as you pay the balance each month, there's no down side. It's pretty easy to manage with online banking.