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12-28-2009 09:46 AM
This is my first post.. took a little courage to do it, but here goes...
So, I recently started taking an honest look at my credit habit. I have a history of applying for high APR home furnishing/clothing store cards after being sold on the "and if you apply today you get an additional 20% off" pitch from the sales person. So, I have 6 such store cards, all PIF!!! ranging from Banana Republic, Ann Taylor, Crate and Barrel, etc...
Question: should I close any of these? I really want to, but am afraid my credit will suffer even more. Most are within the last three years and I know longer credit is better, but I have only recently finished paying them off and I'm afraid I won't have the discipline to keep away from the sale section in JCrew!!!
I have moved to paying off my standard credit cards (a MasterCard from my bank and a Military Exchange card) both which have high balances but low APR's.
So how much will it hurt my score to close all those dang store cards?
Thank you so much!
12-28-2009 10:44 AM - edited 12-28-2009 10:47 AM
Closing them doesnt hurt your credit. They will remain and your credit report for up to 10 years contributing to your AAoA and credit history. The only instant effect you will see is the credit utilization. FICO counts how much of your availble credit you are using. So right now you have all of the available credit for all your cards added together minus the amount on your two bank cards that you are paying off. So if you close the store cards you will lose their Credit limits and that could hurt your score. I would personally recommend that you do not close the cards. Find a way to resist using them. Do you have a safe deposit box at a bank you could lock them in if it is extreme? Otherwise just put them high on a shelf or in the back bottom of a drawer somewhere so they arent in your pocket so you cant use them without purposely digging them out. If you absolutely cant resist another step you could take would be to shred the cards but leave the accounts open. Then later down the road when you are managing more responsibly call them and ask for a new card to be sent telling them the old one isnt working right anymore. The downside to this is they may close the cards themselves after some time with no use. I would recommend tucking them away if you can resist temptation and only get them out every 2 or 3 months for a purchase YOU WOULD MAKE ANYWAY and use them and pay in full immediately and then put them back so it shows usage and you arent running them up.
You are on the right track. You have recognized the problem and are now trying to remedy it. We have all been there or are still there. This site will help you alot. There is alot of good advice and reading other peoples stories helps keep me motivated. Along with wanting to buy a house in a year or so.
12-28-2009 11:02 AM - edited 12-28-2009 11:06 AM
12-29-2009 08:25 AM
Thank you so much! This is great advice. I think this site is going to be a huge help for me, not just because of the education, but because of all the great support from people like you who can give it w/out judging.
12-29-2009 08:29 AM
Thanks, and your right... I took a look and I have THREE from GEMB! I'm going to call and see what they can do consolidation-wise.
I agree with your Military Star assesment, they are great, but they can and WILL get their money.
Thanks so much!
12-29-2009 11:24 AM
As the previous posters mentioned, okstatefan has some excellent advice. The key is for you to find a place to keep the cards where they will no longer tempt you. Just telling yourself you won't spend on them isn't enough, at least I know it wasn't enough for me. Month after month I told myself to limit my spending on the cards but the temptation is extremely strong... especially if you have some kind of rewards program on your cards such as "spend X amount of money on your card and get a discount of X on your next purchase" or something similar. I'd always tell myself "Oooh, if I can just spend this much more, look how much I'll really save!"
What I ended up doing was taking a couple of pieces of paper and wrapping each individual card up really tight with tape covering all edges of the paper (so I couldn't tear into it easily in a moment of desperation) then covered the exposed paper with notes to myself saying things like "Green is good!" "Paper, not Plastic!" "You don't need me!" etc... I carried them around in my wallet like this for a couple of weeks until I felt comfortable buying things only with the cash I had on hand.
Now, each time I look at the notes on the card, I remember the day that I wrapped them up and made a pact with myself to get and stay 100% debt free. Looking at them, I actually feel a surge of pride when I see the notes and know that I've kept that promise to myself.
Personally, I don't think you should close the cards. I agree that you'll need to use them every couple of months to keep them open and active (and still applying to your overall credit utilization) but make a promise to yourself to use them ONLY to keep them active and ONLY for a purchase that you would have made otherwise (as okstatefan said). I guess the way I saw it was that closing the cards (for me) would have been the easy way out. It would have removed the temptation and, therefore, I would have had no real lesson to learn. It was the struggle of putting the cards away (and KEEPING them away) that taught me what I really needed to learn more than anything... financial discipline.
Oh, and btw... I've read all the Shopaholic books and felt such a strong connection to the main character that I almost worried Sophie Kinsella was spying on me! I know what you're going through... heck, I'm still there myself. Stick it out and keep that promise to yourself to beat the cards! Don't ever forget that the credit card companies are NOT your friends. Show them who's boss!
- A fellow spendaholic
12-29-2009 08:21 PM - edited 12-29-2009 08:25 PM
What's the difference between a shopaholic and a spendaholic? I'm trying to understand this post.
You can shop all day and not necessarily spend a penny. My wife loves to shop just to look at things but many times doesn't buy anything. I can see the difference. And so can my CC!!!
12-29-2009 09:51 PM