Ok so if my pay goes into my bank account tomorrow (I say if because I haven't had a payday fall on a weekend since my switch to ING so I am hopeful it will be the same schedule as TD and be there in the morning) I will be paying off Credit Card # 2.
But then what do I do with it? Should I cut it up? Should I call and reduce the limit? Should I save it for an ice scrapper for my windshield come winter?
The plan in my head is to keep it because there is no annual fee, unlike my other card. The interest rate is crazy at 19.9% but I don't plan to ever carry a balance again. I want to lower the limit because I don't feel comfortable having it as high as it is. I would think I would only use it to book flights or car rentals and such. Perhaps to pay for an emergency until I could switch my funds to my chequing account and pay it right off.
What do you think? What have you done with your credit card(s)?
Me in your shoes I would keep it for as you said to book flights, reserve hotels, make online purchases, or rent a car, etc. I have used my debit card for those items before but let me tell you something about trying to reverse a charge because the hotel messed up. It's not easy! and it's your own money you have to wait to get back vs. the credit cards money that will eventually be reimburse and has no effect on your cash flow. However if you don't feel comfortable with having a credit card in procession then I would destroy it. Just make the decision that works for you.
ReplyDeleteI think it's good for stuff you wouldn't normally pay for in cash, I don't think I'd use it regularly, but since it's no-fee, it's good for your credit rating to keep it open anyways. Congrats on getting another cc paid off!! :)
ReplyDeleteCongratulations on paying off another credit card!
ReplyDeleteHonestly, I'd keep the card. That being said, when you phone in to lower the limit, ask them to lower the interest rate as well. There is no reason why it needs to be that high.
Congrats!
ReplyDeleteI am in the same situation! My card is reserved strictly for online/phone reservations, and I try my very best to pay off whatever I charge as soon as humanly possible. I keep the balance as low as is possible($500, although travel makes me nervous, so it's higher now).
Every once in a while, I just look at that goose-egg balance, just to remind myself that it is possible.
ALSO, I keep my card because DH and I have agreed that while our everyday savings is joint, our CC's will remain private. The autonomy is important to both of us.
Keep it until you pay everything off. You may need the credit to get a house or a car. As long as you don't use it. When you have everything paid off. Get rid of it and keep one or two cards for travel. Remember you can get overseas and have a card not work. Have a back up.
ReplyDeleteI would lower the limit on it and then keep it around for things that require a credit card. It is a lot safer to shop online with a credit card than it is with anything else. But make sure to pay the balance every month!
ReplyDeleteI wouldn't lower the limit on the card unless you're sure you won't need credit any time soon. By lowering the limit, you're going to increase your utilization ratio -- which hurts your credit score.
ReplyDeleteNow, I am not saying the credit scores are the be all and end all... but you don't want to hurt it and it isn't just because you're planning on taking out new loans. Since this card is now paid off, your utilization will go down. This should cause your credit score to go up. In a month or two, you can call your remaining card and see if they will lower the interest rate. They are much more likely to agree to that if you don't reduce the limit because (1) your score will be higher and (2) you have a large available line of credit and you can hint that you're thinking of doing a balance transfer -- even if you're not -- and cancelling your account because their rates are high and they have an annual fee.
With a large available balance, you're in a better position to play hard ball with the other card. I can't promise it will work but it gives you the best shot.
As for not trusting yourself with that much available credit: you can freeze the card in ice (just in case), cut it up (but leave the account alive and at the same limit), or if you want to use the card... treat it as a charge card where it must be paid in full each month so the "limit" will be the amount you have to spend that month. It takes time to get used to new habits and can be scary... but if you don't trust yourself, destroying or freezing the physical card without closing the accounts leaves you a lot more options with the other banks.
So you only have $7,000 of debt left? That's awesome :)
ReplyDeletethats great that you'll have it paid off!! yay!
ReplyDeleteI cancel mine, but I know you have credit scores over there so maybe lower the limit if you're going to keep it open.
Congratulations!!!
ReplyDeleteFirst do not lower the limit until you are out of debt completely. that 19.9% will work as motiviation to leave the card alone. Second lower the rate, then hide the card.
I don't know how many credit cards you carry though. If this is the only one, then don't carry the card in your wallet. Leave it in the house for a while.
If it isn't then find the card you've had the longest. THAT will be the card you keep open and active as it's the one with the longest history. Cut up the one you are about to pay off and cancel the account. One less account someone can thief from you. One less account to remember about. One less bill coming in later.
first off - congrats! that is great --- i would leave it as it is & put it in a lock box
ReplyDeleteCongrats on paying off the credit card! Hooray!
ReplyDeleteLike many others have said, if you have the will power, keep the limit as is, and then either use the cc and have it off every month or leave at home in a safe place. That way you still get all the benefits if the credit history and credit you have built up.