topic Re: Should I close these cards.....struggling to understand utilization...PLEASE help??? in Credit Cards

Should I close these cards.....struggling to understand utilization...PLEASE help???

Missy_Bell — Wed, 07 Mar 2012 13:36:25 GMT

I am recovering from a Chapter 7 that was filed in mid 2009. I have been very successful in rebuilding my credit and now have options. Yippie!!

I have a card with Credit One Bank with a $700 limit which I opened up in early 2010 when I was struggling with credit issues. The monthly fee for this card is $8.25 plus a min. interest charge of $1...So, I bitterly pay $9.25 in fees whether I use this card or not. I pay off any outstanding balance immediately and do not owe a balance at this time on this card. I was recently approved for a $500 card with Citibank and it has no fees.....I was thinking I should close the Credit One card to avoid paying fees now that I have the Citibank card. But I am concerned that closing the Credit One card will hurt my score since it is older than the Citibank card. Please advise what I should do.

I also have a secured card with NFCU with a $500 credit limit also opened in early 2010. I have another card with NFCU with a $3000 limit opened in 2011 that now has a $1516 balance. I was thinking of having the $500 secured account closed and applying the $500 deposit to the $1516 balance which would be reduce it to about $950 after the recent payment I just made. I would appreciate help in figuring this out as well.

I do not have a clear understanding of utilization and all of that and I would appreciate any help you guys can give me. You have been awesome in helping me rebuild my credit thus far after my BK and I thank you so much!!!!!

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

tcbofade — Wed, 07 Mar 2012 13:43:19 GMT

Your score might take a slight hit if you close the account. It will lower your AAoA and raise your utilization as well.

However, I'm not sure that "protecting" your score is worth $9.25 a month.

If you do close the account, and your score DOES drop, it won't be for long.

You now have a couple of "real" credit cards...

I'd close it, save the fees, and don't look back. JMHO.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

FrugalRican — Wed, 07 Mar 2012 13:46:01 GMT

So you have 4 cards in all?

Am I reading it right?

Credit One: 0/700

Citibank: 0/500

NFCU: 0/500

NFCU: 1516/3000

Is this correct?

If you don't want to bite the fee every month (I wouldn't), then go ahead and close it even if it affects your AAOA. You're still in the rebuilding process, so better now than later on. Who wants to pay $120 bucks when you got three better cards?

If you do close that card, ideally you'd want to have the balance on your NFCU card to be under 9%, which would be $360 based on the three cards (500+500+3000 = 4000) and then 4000 * 9% = 360.

Use the other two but PIF before the statement date to keep at 0. And start bringing that NFCU balance down.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

Missy_Bell — Wed, 07 Mar 2012 13:53:14 GMT

Thanks!!

I am getting the feeling I need to close the Credit One account. I have paying that fee which actually doubled since I got the card two years ago. It went from $59/yr to $99/year plus min. $1 int per mth so I have no problem saying bye bye.

I have several other cards which I did not mention as I don't owe balances on them. I have about $5000 avail credit lines and only owe $1516 to Navy Fed.

What about closing the secured NFCU account and applying that $500 to the balance owed on the larger account. Shoul I do that or not??

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

FrugalRican — Wed, 07 Mar 2012 13:56:08 GMT

Missy, paint me a clearer picture then. I'm somewhat confused on all of what you have.

And if you have a feeling you should close that one card, trust your gut.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

tcbofade — Wed, 07 Mar 2012 13:59:42 GMT

Missy_Bell wrote:

What about closing the secured NFCU account and applying that $500 to the balance owed on the larger account. Shoul I do that or not??

I would.

If you no longer need the secured card, get that money back and use it to reduce your balance on the other card. Your logic is perfect! :)

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

clocktick — Wed, 07 Mar 2012 16:22:46 GMT

Missy_Bell wrote:
Thanks!!

I am getting the feeling I need to close the Credit One account. I have paying that fee which actually doubled since I got the card two years ago. It went from $59/yr to $99/year plus min. $1 int per mth so I have no problem saying bye bye.

I have several other cards which I did not mention as I don't owe balances on them. I have about $5000 avail credit lines and only owe $1516 to Navy Fed.

What about closing the secured NFCU account and applying that $500 to the balance owed on the larger account. Shoul I do that or not??

Closing a card will NOT affect your 'average age of accounts' because closed cards still count. It will affect your utilization and could lower your score. Regarding your question above, would you want to close your $500 secured account if you didn't have a balance on your your other Navy card? Is the reason you want to close it specifically to pay on the other card? If you didn't close it, would you be able to pay off that balance just as fast?

I had 2 secured cards and felt they helped me tremendously while building my credit. I'm just trying to see where you stand right now so we can potentially give you better advice. Congrats on your cards, by the way, and improving your overall credit world!

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

MarcinXP — Wed, 07 Mar 2012 16:29:12 GMT

+1 Clocktick!

Closing Credit Cards does not affect AAOA because the tradeline will still be there for 10 years. Only thing affected is utilization, however it looks like you manage your cards decently and got another $500 prime card. Close that sucker out...is it really worth keeping it open for $120 a year..I will be closing mine out before the year hits as it helped me rebuild and I paid annual fee upfront and my monthly fees won't start until Nov 2012

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

Wolf3 — Wed, 07 Mar 2012 18:31:19 GMT

Missy_Bell wrote:
Thanks!!

I am getting the feeling I need to close the Credit One account. I have paying that fee which actually doubled since I got the card two years ago. It went from $59/yr to $99/year plus min. $1 int per mth so I have no problem saying bye bye.

I have several other cards which I did not mention as I don't owe balances on them. I have about $5000 avail credit lines and only owe $1516 to Navy Fed.

What about closing the secured NFCU account and applying that $500 to the balance owed on the larger account. Shoul I do that or not??

You have done well, Definitely close the Credit One, way too expensive. The secured card has served it purpose well, time to close it and pay off the other balance.

This will not hurt your score, might help a little, as your utilization should be better.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

Missy_Bell — Wed, 07 Mar 2012 20:01:33 GMT

I came to this board this AM thinking that I want to close the Credit One account which I have replaced with a Citibank card. It just simply does not make sense to pay Credit One $9.25/mth for a $700 limit and I can get $500 CL from Citibank so that is done.

The jury is still out on the NFCU secured card. I am thinking I will close it as well and pay down the balance on the NFCU card with the higher balance but I will wait and see what happens with my score in the next 30-60 days.

Thanks for your help!!

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

LS2982 — Wed, 07 Mar 2012 21:33:13 GMT

Missy_Bell wrote:
I am recovering from a Chapter 7 that was filed in mid 2009. I have been very successful in rebuilding my credit and now have options. Yippie!!

I have a card with Credit One Bank with a $700 limit which I opened up in early 2010 when I was struggling with credit issues. The monthly fee for this card is $8.25 plus a min. interest charge of $1...So, I bitterly pay $9.25 in fees whether I use this card or not. I pay off any outstanding balance immediately and do not owe a balance at this time on this card. I was recently approved for a $500 card with Citibank and it has no fees.....I was thinking I should close the Credit One card to avoid paying fees now that I have the Citibank card. But I am concerned that closing the Credit One card will hurt my score since it is older than the Citibank card. Please advise what I should do.

I also have a secured card with NFCU with a $500 credit limit also opened in early 2010. I have another card with NFCU with a $3000 limit opened in 2011 that now has a $1516 balance. I was thinking of having the $500 secured account closed and applying the $500 deposit to the $1516 balance which would be reduce it to about $950 after the recent payment I just made. I would appreciate help in figuring this out as well.

I do not have a clear understanding of utilization and all of that and I would appreciate any help you guys can give me. You have been awesome in helping me rebuild my credit thus far after my BK and I thank you so much!!!!!

Shut down Credit One!!! They are not worth the fees!!

You should keep your overall Util. around 1-9% for the best possible FICO point increases.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

bichonmom — Thu, 08 Mar 2012 03:11:44 GMT

It sounds like you closed the secured Credit One, which ITA. The fees are astronomical. I hate that CCCs are punitive towards rebuilders like that.

Re the NFCU, I'd talk to them about graduating it to an unsecured CC. If I recall correctly, Navy doesn't graduate their secured cards, but I'm not 100% sure. If it can graduate, then I'd keep it open. If not, then I think you can go ahead and close it and apply the deposit to your other Navy card.

The one thing that I think is important to address is that you're carrying a 50% balance on Navy. I'm not sure if this is a cumulative balance that you're paying down monthly, or if it just your monthly charges that you will be PIF by the due date. One of the hardest hits to your FICO is util. You need to keep your CCs at zero balances, with only one reporting @<9% for the best FICO. (That's 9% of the ONE CC you have a balance on, not 9% of your total CL for all of your CCs.)

Also, if you start carrying balances, you're going to find other CCs won't approve you -- if and when you decide you want to app for a new CC. Also, your current CCs will be softing you and it is important for them to see that you're handling your credit responsibly. They get nervous when they see high balances, especially since you only have a couple of CCs.

You have Citi @ $500, Navy @ $500 and Navy @ $3000 w/a $1500 balance. That is VERY high util, not just for the single Navy card, but for your overall util. Your total CL is $4k. $1500 is nearly 40% util. That's a lot, especially since you're so recently out of a BK. If you want to get CLIs and build a portfolio of prime CCs, you should focus on getting your util down.

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

amercnchopz34 — Thu, 08 Mar 2012 10:08:32 GMT

bichonmom wrote:
It sounds like you closed the secured Credit One, which ITA. The fees are astronomical. I hate that CCCs are punitive towards rebuilders like that.

Re the NFCU, I'd talk to them about graduating it to an unsecured CC. If I recall correctly, Navy doesn't graduate their secured cards, but I'm not 100% sure. If it can graduate, then I'd keep it open. If not, then I think you can go ahead and close it and apply the deposit to your other Navy card.

The one thing that I think is important to address is that you're carrying a 50% balance on Navy. I'm not sure if this is a cumulative balance that you're paying down monthly, or if it just your monthly charges that you will be PIF by the due date. One of the hardest hits to your FICO is util. You need to keep your CCs at zero balances, with only one reporting @<9% for the best FICO. (That's 9% of the ONE CC you have a balance on, not 9% of your total CL for all of your CCs.)

Also, if you start carrying balances, you're going to find other CCs won't approve you -- if and when you decide you want to app for a new CC. Also, your current CCs will be softing you and it is important for them to see that you're handling your credit responsibly. They get nervous when they see high balances, especially since you only have a couple of CCs.

You have Citi @ $500, Navy @ $500 and Navy @ $3000 w/a $1500 balance. That is VERY high util, not just for the single Navy card, but for your overall util. Your total CL is $4k. $1500 is nearly 40% util. That's a lot, especially since you're so recently out of a BK. If you want to get CLIs and build a portfolio of prime CCs, you should focus on getting your util down.

Should u let the 9% actually show past the statement date?

Re: Should I close these cards.....struggling to understand utilization...PLEASE help???

FrugalRican — Thu, 08 Mar 2012 14:46:23 GMT

amercnchopz34 wrote:
bichonmom wrote:
It sounds like you closed the secured Credit One, which ITA. The fees are astronomical. I hate that CCCs are punitive towards rebuilders like that.

Re the NFCU, I'd talk to them about graduating it to an unsecured CC. If I recall correctly, Navy doesn't graduate their secured cards, but I'm not 100% sure. If it can graduate, then I'd keep it open. If not, then I think you can go ahead and close it and apply the deposit to your other Navy card.

The one thing that I think is important to address is that you're carrying a 50% balance on Navy. I'm not sure if this is a cumulative balance that you're paying down monthly, or if it just your monthly charges that you will be PIF by the due date. One of the hardest hits to your FICO is util. You need to keep your CCs at zero balances, with only one reporting @<9% for the best FICO. (That's 9% of the ONE CC you have a balance on, not 9% of your total CL for all of your CCs.)

Also, if you start carrying balances, you're going to find other CCs won't approve you -- if and when you decide you want to app for a new CC. Also, your current CCs will be softing you and it is important for them to see that you're handling your credit responsibly. They get nervous when they see high balances, especially since you only have a couple of CCs.

You have Citi @ $500, Navy @ $500 and Navy @ $3000 w/a $1500 balance. That is VERY high util, not just for the single Navy card, but for your overall util. Your total CL is $4k. $1500 is nearly 40% util. That's a lot, especially since you're so recently out of a BK. If you want to get CLIs and build a portfolio of prime CCs, you should focus on getting your util down.

Should u let the 9% actually show past the statement date?

You can pay it off the day after or even the day right before the due date, just as long as you PIF before the due date.