topic HELP - Closing Cards to Prevent Tempation? in Credit Cards

HELP - Closing Cards to Prevent Tempation?

FeedMeCredit — Sun, 01 Aug 2021 01:10:21 GMT

Okay, I'm admitting it. I have no self-control apparently. I cut up my cards awhile ago, even reported them "lost" and never activated the replacements, so I'd have nothing to pull out of my wallet. But I recently found a way, using the virtual card number my bank so conveniently spits out. I'm tired of the CC temptation and apparently can't handle it, so I'm closing accounts. I just don't want to ruin my credit in the process!

In addition to these CCs, which I will pay off in full as I close, I have a car loan that's always paid on time.

Thinking about closing - Newest to oldest...

- Cap1 $500 limit (low limit, crappy rewards) < CLOSED as of today

- Citi $1,600 limit (mileage for airline that rarely flies out of my new closest airport)

- Citi $2,060 limit (mileage for same airline, originally had a $4k limit but they're chasing it down)

- Cap1 $3,600 limit (I think 1.5% back, I don't bank here anymore)

- Citi $3,500 limit (no rewards, opened for balance transfer offer)

Keeping Open - High limits, best rewards, oldest accounts, will leave locked...

- Mastercard $9,400 limit 2% back on everything, no foreign/travel fees

- Visa $8,000 limit 1.5% back on everything, no foreign/travel fees

How badly can I expect closing accounts to hurt my credit score in the long term? I'll be applying for a home loan no sooner than 12 months from now. If I only have the above two accounts ($17,400 combined limits) and 0% utl, will I be able to get a 700+ score?

Re: HELP - Closing Cards to Prevent Tempation?

Red1Blue — Sun, 01 Aug 2021 01:17:37 GMT

If there is no AF it is better to leave them open and sock drawer them. Closing accounts will reduce your availabile credit. It is better to leave it alone if they are not costing you AF.

Re: HELP - Closing Cards to Prevent Tempation?

Yasselife — Sun, 01 Aug 2021 02:28:49 GMT

For optimal scores, have 3 cards minimum, and let a small balance [8.9%] report. This method is called AZEO [all zero except one], we use it before applying for credit.

I hope that answers your question. All else is up to you. Every person is different and if temptation is a problem for you then, take necessary action to avoid getting in trouble.

Re: HELP - Closing Cards to Prevent Tempation?

FeedMeCredit — Sun, 01 Aug 2021 04:12:45 GMT

Thank you, that is very helpful! I did not know 3 cards was optimum, I'll take that into consideration. I'll also look into the AZEO method.

Re: HELP - Closing Cards to Prevent Tempation?

Remedios — Sun, 01 Aug 2021 04:29:27 GMT

OP, what kind of temptation are you talking about?

If this is about spending, how will closing low limits cards help you while you're keeping ones with whom you can do the most damage?

If this is about applying for additional credit, how will closing existing accounts help you not open future ones?

I'm a little bit confused here

Re: HELP - Closing Cards to Prevent Tempation?

FeedMeCredit — Sun, 01 Aug 2021 05:46:06 GMT

I have never carried a balance on my high limit cards, I simply don't touch them. These low limit cards racked up balances due to unforeseen circumstances last year. Things are better now, but now that I'm working to pay them down, I find myself putting small charges on them "here and there" with plans to pay for that purchase right away, but it ends up blending into the existing balance. I tell myself, "Oh, I'll be making a BIG payment anyway in a week or two, it's fine..." but it's prolonging the payoff process.

So, I'm tired of accidentally using the "credit card float" (to borrow a YNAB term) due to the "I'm paying it anyway" mindset.

On top of that, I got the cards in question during an app spree ~2 years back and they serve me no good purpose. Most are low limits, like the Cap1 I paid off and closed today. The reward programs aren't great and interest rates are a tad high.

The only reason I'd leave them open is if closing this many accounts would negatively impact my long-term credit score when I apply for a home loan in 12+ months. Otherwise, I just don't see any benefit to keeping them.

Re: HELP - Closing Cards to Prevent Tempation?

Yasselife — Sun, 01 Aug 2021 06:08:52 GMT

If you currently have an overall balance higher than 28.9% I advise you not to close them until you lower the debt under 8.9%... closing will lower your overall credit limit and raise your utilization %.
I went through the same as you're describing, $10k in debt and I've been giving it all(LOL) to it pay off; and this happend to me even having some knowledge about finances and credit.

Re: HELP - Closing Cards to Prevent Temptation?

FeedMeCredit — Sun, 01 Aug 2021 07:11:28 GMT

I'm definitely looking at it from an utlization perspective, but are there impacts beyond that? Planning to have $0 balances in the next 5 months.

Assuming I have 0% utl in 12+ months when I go to apply for a home loan, will closing these accounts today impact my score negatively in some other way? That's what I'm trying to figure out, but credit scores really are a puzzle!

Re: HELP - Closing Cards to Prevent Temptation?

Anonymous — Sun, 01 Aug 2021 11:18:07 GMT

^^^ in that situation, no they most likely will not hurt you. Most closed accounts stay on your reports for up to ten years after closing and continue to contribute to age factors.

I would advise you not to close them though, especially if you can give them to a trusted family member to keep for you, or put them in a safety deposit box at your bank, somewhere to get them out of reach. As for the electronic access to the card numbers, that's a hurdle you'll just have to learn to overcome by keeping the mortgage goal in mind.

Re: HELP - Closing Cards to Prevent Tempation?

kiea — Sun, 01 Aug 2021 12:05:13 GMT

It seems to me, you don't carry a balance on the higher limit cards because you have the lower limit cards available for you to use. If you close all of the lower limit cards you will end up using the higher limit cards more.

You should hide the cards somewhere safe so you won't use them. If you want to close them, I don't think it's a good idea to close all of them within the same time period

@FeedMeCredit wrote:
I have never carried a balance on my high limit cards, I simply don't touch them. These low limit cards racked up balances due to unforeseen circumstances last year. Things are better now, but now that I'm working to pay them down, I find myself putting small charges on them "here and there" with plans to pay for that purchase right away, but it ends up blending into the existing balance. I tell myself, "Oh, I'll be making a BIG payment anyway in a week or two, it's fine..." but it's prolonging the payoff process.

So, I'm tired of accidentally using the "credit card float" (to borrow a YNAB term) due to the "I'm paying it anyway" mindset.

On top of that, I got the cards in question during an app spree ~2 years back and they serve me no good purpose. Most are low limits, like the Cap1 I paid off and closed today. The reward programs aren't great and interest rates are a tad high.

The only reason I'd leave them open is if closing this many accounts would negatively impact my long-term credit score when I apply for a home loan in 12+ months. Otherwise, I just don't see any benefit to keeping them.

Re: HELP - Closing Cards to Prevent Temptation?

VintageMel — Sun, 01 Aug 2021 13:57:50 GMT

@FeedMeCredit wrote:
I'm definitely looking at it from an utlization perspective, but are there impacts beyond that? Planning to have $0 balances in the next 5 months.

Assuming I have 0% utl in 12+ months when I go to apply for a home loan, will closing these accounts today impact my score negatively in some other way? That's what I'm trying to figure out, but credit scores really are a puzzle!

I just wanted to note that you don't want 0% utilization as that will actually hurt your score. The All Zero Exept One advice above is what I'd strongly recommend.

And stick around here a while. The folks here will help unravel the mysteries of FICO scoring, until they no longer seem mysterious at all.

Re: HELP - Closing Cards to Prevent Temptation?

Hex — Sun, 01 Aug 2021 14:09:15 GMT

Maybe you could take a picture of home like the one you hope to buy. Make a few copies. Put one in your wallet, in your car and maybe even on your background screen on your phone. It could help to remind you to think about the money you spend in terms of how it will effect your ultimate goal. Give it a shot it might work.

Re: HELP - Closing Cards to Prevent Temptation?

Hex — Sun, 01 Aug 2021 14:16:23 GMT

Also when I get the urge to go spend some money I go to the supermarket. Helps me to scratch the itch with little to no damage to my finances.

Re: HELP - Closing Cards to Prevent Temptation?

SoCalGardener — Sun, 01 Aug 2021 16:29:27 GMT

I agree that in the long run, closing these cards won't have much impact. But...you could keep them (for their history, their presence on your reports) and not only sock drawer them, but FREEZE them. Each card's website/app should have a 'freeze' option, or you may need to call and have a CSR do it. I've never done this, but my understanding is that it in no way adversely affects...anything....but it prevents the account (note that I didn't say 'card') from being used.

Sure, you could unfreeze them at any time so it's definitely not foolproof, but it adds an extra hurdle that may be enough to stop you in your tracks.

Re: HELP - Closing Cards to Prevent Temptation?

FeedMeCredit — Mon, 02 Aug 2021 18:51:30 GMT

That is good advice! I actually "locked" all of these cards last week and that has helped me officially get out of the mindset of using them, I was just thinking to close them since I don't intend to ever use them even if I do reach for a CC in the future due to the high rates, relatively low limits, and poor rewards.

It sounds like closing them will not impact my average age of accounts. I realize closing them will decrease my overall available credit, but if I'm no longer carrying balances and doing the AZEO approach with 3 remaining cards, would less credit overall negatively impact my score anyway?

I also read above that, if I'm going to close them, not to close them all over a short period. Could I ask why? I really value all of this advice, I'm just trying to better understand how creditors (and a future lender) might look at this decision to payoff and close down these cards over a period of 2-3 months.

Re: HELP - Closing Cards to Prevent Temptation?

FireMedic1 — Mon, 02 Aug 2021 20:42:07 GMT

Fico doesnt really care about total available credit amounts. You can have a great score with $5000 total CL's or $50,000 total CL's. Its the percentage thats reported each month on a single card and then your overall percentage of all card balances. Higher available credit amounts looks good to other companies when you apply for higher end stuff, and eventually its a personal thing for a better word ego thing. Plus you have enough for emergencies if need be. Years ago I did the same as you. Had swipe fever and then it started to rack up. Eventually I closed all credit accounts. I had no credit cards from 2005 until after BK in 2016. But you need credit these days for almost anything. But this time I was older and wiser. The swipe fever never enters my mind. I look at it as it isnt free money. The years I've been on here. Almost all of the folks who hit rock bottom in rebuild. Rebound with a new mindset and it is very very rare they let history repeat itself. There's no reason to close the cards. They're doing more good than harm. Its not their fault. Dont blame the cards. Its just a piece of plastic. It falls on the user and changing their mindset. Just hit the reset button. Swipe your debit card from the bank for now. Funds go low. Stop swiping.

Lastly. The money you send out on payday to pay the cards that was charged for useless stuff could go to you and not a bank. Yes use them for rewards on essential things like gas groceries and so on. Draw the line there. If you want something really bad. Put it in savings. Then use the card for the rewards and then pay it with your savings. You earned it. Much better feeling. My favorite saying is. If you cant pay it, dont charge it. Keep them open. Good Luck!!!!!!

Re: HELP - Closing Cards to Prevent Temptation?

RSX — Mon, 02 Aug 2021 21:03:38 GMT

lots of good advice on the thread so far - i will only add one more thought

if you do use the card, regardless of how small the purchase is, log in at night, and make a payment for that amount - that way it is keeping you up to date all the time

i do this on a couple of my CC's and it works fine

for the cards that dont allow you to make a payment when you have a Pending charge - just push the payment from your bank - same result

Re: HELP - Closing Cards to Prevent Temptation?

DONZI — Mon, 02 Aug 2021 22:18:11 GMT

TL;DR = Sleep on it, a week or more.

FWIW, I had a small assortment of credit cards spanning from ~1983 until around 1999. They were okay but not really -that- big of deal to me since I mostly used cash and checks.

The idea of "I don't intend to use them or need them" took hold and I closed them or let them just fade away as the lenders closed them without me even paying attention.

Between 2000 and now I spontaneously took an offer for paypal credit.. I used paypal a fair bit for buying from software vendors, hosting providers and so forth -- all digital delivery type stuff. I also took up an offer one day at sears for a card (#2, the first was long since closed by Citibank due to lack of use) to pay for a pair of high end batteries for my dually -- that card also closed by grantor for lack of use.

Fast forward to 2019.. Nothing in credit alive but PayPal credit with $1500 CL.. But now the appeal of cash back and so forth -and- the gradual loss of any substantial perks for paying cash, my 3rd cellphone since ~1995, etc.. It dawned on me that I could stand to gain a bit more flexibility with credit cards again, without a doubt.

Hindsight is 20/20 so they say. I knew about credit scores and reports only topically.. I really regret that I let a early revolving credit foundation just erode away. My potentially thick, excellent profile was reduced to the fumes of a closed 30+ year old sears card, a 21st century closed sears card and a 99% dormant $1500 paypal credit account. lol

The 30+ year old account is potentially going to fall off this month... and it's only listed on 2 of the big 3 CRA -- along with the other 2 oldest accounts my AAoA is 5 years and 2 months as of today. On the CRA which does not show the 30yr account I have an AAoA of 2 years.

That is diluted with the addition of 5 new credit card accounts (7 once the latest 2 begin reporting) in roughly the last 15 months. I also took out a secured PLC and a secured installment loan from a local bank, which I paid down to ~8% early... However that was a bank loan and it just paid off recently since it's no SSL.

Bottom line, they're going to record all this stuff until you die. You can't go back an undo some things, but it sure pays to think ahead about the cause and effect. I'm too old to probably even come close to resurrecting the thick profile I might of had before I give up the ghost.

All in all, everything is okay... but at this time in life for me, I've got a lifetime of assets to do things with and things can be costly, having to jerk around with low limits, I know, seems to be uhh, silly..

However they are useful and help pave the road forward. Credit will remain to be a gift I guess, so despite sometimes letting my ego gripe about a $1000 credit card that costs me nothing it's still useful and helping get somewhere closer to where I might have been if I'd looked further ahead at my credit so long ago.

Re: HELP - Closing Cards to Prevent Tempation?

Legal_Girl — Tue, 03 Aug 2021 01:35:10 GMT

I agree that I would keep the cards with no AF and only use them every few months to buy a cup of coffe or make some small purchase and then pay it off. Maybe alternate between the cards every few months for the small purchase. If not used, many CC companies will cancel the CC for lack of use.

Re: HELP - Closing Cards to Prevent Tempation?

jmcmillan — Tue, 03 Aug 2021 22:06:31 GMT

@FeedMeCredit wrote:
[...] I find myself putting small charges on them "here and there" with plans to pay for that purchase right away, but it ends up blending into the existing balance. I tell myself, "Oh, I'll be making a BIG payment anyway in a week or two, it's fine..." but it's prolonging the payoff process.

I can sure relate to this 100%. This mindset is part of the reason I had to file for bankruptcy last year. I have 3 secured cards now, and I thought I had learned from bankruptcy, but I found these small charges sneaking up on me again. I have decided to stick with debit, and I just have some auto pay bills go to the credit cards.

If you really can’t control yourself, could you have a trusted family member take possession of the cards and change the password to your online banking?