Which subprime credit card should I pay off first and cancel?

[Anonymous]

Hello. I am in the process of rebuilding my credit for the past year and a half. I have made some improvement, as my credit scores were formerly in the low 500s and now they are in the low 600s. I got approved and received a Capital One credit card with a $500 CL (was declined in the past). I have four other credit cards open and active: Indigo Mastercard (formerly Rewards 660; $350 CL), First National Credit Card ($250 CL), First Premier ($300CL), and Credit One ($300CL). I have only been paying the minimums on all of them, because I work part-time and the rest of my income goes towards settling my other larger debts. Most of the balances are lower than $200, and I haven't used any of them recently. As you can imagine, the APRS are ridiculously high on all of them, but the highest is First Premier and Indigo. Indigo also charges a $10 "monthly participation" fee, which annoys me for simply having the card. I would love to pay off and get rid of one of these cards in the next week. I just cannot decide which one to get rid of?

Also, after deciding which of those cards will go, should I do a balance transfer onto the new Capital One card? I don't have all the details on the balance transfer yet, but I'm looking into it. I would like to make the Capital One card my main card, as it seems to have a better reputation and lower fees than the other four.

Any suggestions would be appreciated! Thanks in advance.

[inthematrix]

I would pay off Indigo and First Premier first. Anything with a monthly fee should go, IMO. And a $10 monthly fee is ridiculous. After that pay them down in order of the highest APR.

[inthematrix]

To clarify, don't close them all. That could/would hurt your score. But if the Indigo and FP aren't significantly older than your other accounts, I'd close them to free up the money from the monthly fees. Pay the others down to zero and then use them for a small purchase every couple of months, paying in full each time. Once you have your zero balance the APR doesn't matter, just the annual fee.

[kjm79]

Listing the balances on each card might help others when chiming in with their suggestions. 

When closing accounts there are a few things to keep in mind.  First is that closing the account(s) will NOT reduce your average age of accounts and that account will continue to report for 10+ years from the date of closing. 

If you close an account while carrying a balance, that account will continue to be counted in your utilization (both the balance and the limit).  If you close an account with a zero balance you lose that account's credit limit and based on what balances you carry on your remaining accounts this could really mess with your utilization.  Closing Indigo and First Premier (while at first glance may be the best choices for closing based on the fees, they are also your cards with the higher limits).  Of the cards you listed your credit limits equal $1700.  Closing Indigo and First Premier with zero balances brings that down to $1050.  While that's not e big drop, depending on what your other balances are, it could wreak havoc on your util.  If all accounts were at zero I'd definitely suggest closing the accounts with the the most fees and highest apr's.  If not at zero, just watch your util.  If possible, get all your accounts to zero THEN close them.  Much easier to watch and manage your util then. 

As for your BT question, again, depends on what your other balances are.  $500 is a fairly lower limit and transfering balances can put this card in the high util category very quickly. 

[Anonymous]

Thank you for your suggestions. I think I'm going to attack the Indigo card first and pay that one off. They also do not ever do CL increases, so it's a fairly useless card to me. I won't close it though, until it is at a zero balance.

[Booner72]

I had a FP card since 2007 and my CLI was 400 and never was higher.  This included 7.00 monthly fee.  I maxed that card out the day I got it and there it stayed until May of this year when I paid it off to help my score.

Now FP is offering me new FP cards.  I finally got a decent VISA from CU and called FP to close the account.  The rep went to do that on the computer and said that FP is willing to give me 45.00 credit on my card to NOT close the account.  This only took 2-3 months of having the balance at zero to go from their Poop List to their "your credit is amazing" list.  Maybe if you can get this one paid off, and keep it paid off a few months, they will do the same thing for you - pay you to not close it.

I'm going to go ahead and close it anyway next month.

[AndySoCal]

I would pay off them in order of  paying off the one the saves me the most money first.  In regards to balance transfers call Cap 1  and ask them.

[Anonymous]

Thanks for the additional info on FP. I will hold on to that card for a bit, and see how I can pay it off, yet keep it open.

[BungalowMo]

One thing I'd like to mention is that, even tho they have a fee, for now, I'd keep the Credit One.

I had this card & for the first couple years, call them every 6 mos & ask for a CLI.  I got $100 every time & they never did a hard inquiry.  Ask them to be sure, as their policies might have changed, but I've never seen any post of them doing a hard.  In a few years you'll have a card with a 1k limit.

Whatever cards you have that WON'T give you increases & want to charge you fees, I'd close them.  I usually don't suggest closing any cards, but when a fee is attached, the rules change.

Just my .02

[Anonymous]

Thanks BungalowMo. Funny you mention it, just yesterday I applied and got a credit line increase of $100 on my Credit One. I never requested it before and it will help me in the long run.  I've already decided to keep the Credit One for sure. I really need to can the Indigo card. To pay a monthly fee just to possess a card that will never ever give a CLI is ridiculous. I think that's really hitting home for me. So definitely agree with you there!