Well, we paid off all of our credit cards months ago. And we closed all accounts except one. Now the one we kept open is trying to charge us the annual fee.
I have no desire to ever use a credit card again, but I'm not sure I feel safe closing this last account. I know Dave Ramsey would advocate strongly to close the account. But something about having it does make me feel just a little more secure.
What do you think? Has anyone else closed all their credit card accounts?
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We are away a lot for hockey which means hotel rooms. Out of curiousity I tried asking the hotels we phoned what other ways they offered of guaranteeing a room besides CC. Every one I phoned, said CC was THE only way to do so for their particular hotel/chain.
Our plan is to keep open our accounts even after paying them off. We won't have them around - they will be all cut up. I know DR suggests closing them but also we are trying to beef up our credit scores and if we closed them including the longest one that we have opened it would damage the scores.
I would say "Can we really live without credit cards" shouldn't be the issue. I know people that may charge on them to get points or something and have the intention of paying them off right away - that is playing with fire. I guess it would also depend on the annual fee. Capital One wants to change us $39 a year on a $500 limit to keep the card opened? Then, no it will be shut down! HTH!
I've only paid off one of my three credit cards and haven't even thought about what I'll do when they are paid off. Hmmmm...I guess I'd feel safer keeping one, but then again that's what the emergency fund is for, right? I don't know!
We use the American Express Blue as our only credit card. So far, they don't charge anything a year. I would change that credit card to one that doesn't charge an annual fee.
I'm with sharon - look around for one that will not charge an annual fee... with everything paid off, I am sure your credit scores are probably amazing, so you shouldn't have a hard time finding one.
Jolie - we do have a Visa debit card that works exactly the same as a credit card for guaranteeing a room, renting a car, etc.
Our Emergency Fund is around $25,000 now, but I still worry that might not be enough and some day we might need a credit card . . .
The yearly fee is only $20. Still thinking about it .. .
It would have been more beneficial to your credit score to keep the accounts open after you paid them off. Now your available credit has decreased and you have lost the payment history on those accounts. Even if you don't use credit cards, credit scores do matter for things like insurance premiums and job searches. Having only one available credit line doesn't seem like enough security for a family. Dave Ramsey doesn't have all the answers, it's usually better to thoroughly research all your options from many different sources, in my opinion, to make a financial decisions and not just listen to one person's thoughts.
I agree w/ Frugalicious. Capital One's annual rate is outrageous! I asked if they could wave it since my limit is only $500 and the declined. So I asked them to raise my credit limit, and again they declined! And my credit score is good. So they have 1 less customer now!Good riddance Capital One CC!
- Sandy
Close 'em all. Everyone will find a reason to keep them around. It's all crap. Close 'em and be done with the insanity.
You can do it all with a debit card. You may need to have some money in the account for them to run an approval, but it works fine.
Anonymous is wrong about "losing your payment history". It sticks around for 7 years or even longer...
Be free.
Did you actually close the accounts or just cut up the cards? I know Dave doesn't care about his credit score, but I care about mine. Closing accounts isn't good for the score. But I would never pay an annual fee--there's just too many cards out there with no fee.
No, we haven't closed all of our accounts. In fact, we were told that closing them hurt your credit. I heard that keeping them open with a zero balance was a better move so that's what we did. I wanted to, though, because I felt if I had too many open it would lead me to make purchases. I like to have them for insurance, just in case.
I am LOVING your blog!!! We are now doing what you guys started doing a couple of years ago, paying off our CREDIT CARDS. What an example you have set for us. Now I truly BELIEVE that we can get out of debt!!! WOW. I am so inspired. Thank you so much!!!
Sidenote......I have heard it helps your credit score if you have credit card accounts open. Of course, not too many. It just shows that you are "approvable". Hope that helps.
Come visit me at www.tilldebtsdous part.blogspot.com. I look forward to keeping up with your blog!!!
Could a bank loan be used in a situation you felt would otherwise call for a credit card to be used?
I've also heard that keeping the card you have had open the longest can help, but it may backfire if you are tempted to use it (and moreover, head down that slippery slope to debt again). We just paid off two credit cards and gave them to a close friend to put in her safe for us. We don't want to close them yet until our credit scores improve, but also don't want to be tempted to ever use them!
Yes, cut it up! I have closed all my credit card accounts and having my Baby Step 1 of $1,000.00 is really secure. We had our car break down just last week and since we didn't have any credit cards for that emergency we used our $1,000.00 fund alas. Even if you don't use your credit cards there will come a day where you wont be able to resist and charge them up again.
@ jolie, you do not need a credit card to book hotel rooms, all you need is your debit card. It works the same way.
@ Frugalicious D.R. says to not use credit because you don't need credit to buy anything. Especially if you are not going to take out loans for your purchase and go into more debt. And he discourages using the cards to build points or rewards because mathematically you lose more $ that you put on the credit card then the amount of rewards you get. People buy more with a credit card because the pain doesn't register like when you use physical cash you are more likely to be wiser when you purchase and more reluctant to give it away.
@Dad, you go man!
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