topic Re: Credit Cards after Refinance in Credit Cards

Credit Cards after Refinance

Anonymous — Sun, 30 Jan 2022 05:49:26 GMT

Hi, I recently refinanced my mortgage and I zeroed out all 23 of my credit cards ($68,000 worth). Now my question is what to do with all these 0 balance credit cards. should I keep them all open or should I close the majority and will that hurt my credit? I plan on using my AAdvantage citi to pay utilites etc. and pay in full to accumulate miles. My fico has hovered in the low 600, mainly because my high debt to credit line ratio. I have 0 late and oldest card is around 10 years old. Paid off car loan and the only liability on my report that will remain is the new mortgage and an old student loan that has mushroomed beyond imagination, but it is showing current. advice? Thanks.

Re: Credit Cards after Refinance

FinStar — Sun, 30 Jan 2022 06:03:19 GMT

Hi, welcome to the community @Anonymous

You mentioned 23 CCs. So that the community can provide some guidance, can you share the list of all the CCs you have, their age and their limits? Are you looking to streamline your collection, maximize value on the ones you have or...?

Re: Credit Cards after Refinance

Anonymous — Sun, 30 Jan 2022 09:20:30 GMT

I'm not sure what I'm looking to do to be honest. I will have to think about that. Listing all that information requested takes time, so I'll need a day or 2 to provide the info. Thanks.

Re: Credit Cards after Refinance

SouthJamaica — Sun, 30 Jan 2022 13:48:27 GMT

@Anonymous wrote:
Hi, I recently refinanced my mortgage and I zeroed out all 23 of my credit cards ($68,000 worth). Now my question is what to do with all these 0 balance credit cards. should I keep them all open or should I close the majority and will that hurt my credit? I plan on using my AAdvantage citi to pay utilites etc. and pay in full to accumulate miles. My fico has hovered in the low 600, mainly because my high debt to credit line ratio. I have 0 late and oldest card is around 10 years old. Paid off car loan and the only liability on my report that will remain is the new mortgage and an old student loan that has mushroomed beyond imagination, but it is showing current. advice? Thanks.

1. Keep open all cards that do not have an annual fee.

2. As to cards which have an annual fee, evaluate whether they're worth keeping.

3. Let one bank card report a small balance each month before you pay it off, while the other cards report zero balances.

4. Put some use on each card you want to keep open, at least every couple of months.

Re: Credit Cards after Refinance

Anonymous — Sun, 30 Jan 2022 15:42:58 GMT

@SouthJamaica wrote:
1. Keep open all cards that do not have an annual fee.
2. As to cards which have an annual fee, evaluate whether they're worth keeping.
3. Let one bank card report a small balance each month before you pay it off, while the other cards report zero balances.
4. Put some use on each card you want to keep open, at least every couple of months.

This will help maximize scores and keep cards open, but I don't know if that is the biggest consideration. I don't know if this applies to OPs case, but one possible big issue with paying off all cards/other loans with a refinance is to make sure that balances don't rise again in the future! If that's a possibility I certainly wouldn't do #4, as that can encourage (hopefully small) unneeded spending. The cards you want to keep should have enough organic spend that you don't need to artificially keep them alive. I would decide which cards are useful, and either close or let the issuer close the others.

Re: Credit Cards after Refinance

Anonymous — Sun, 30 Jan 2022 20:18:19 GMT

Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?

Re: Credit Cards after Refinance

Anonymous — Mon, 31 Jan 2022 01:55:22 GMT

General advice is not to close accounts if they don't have an annual fee but in your case with 23 cards what I would do is close some you don't use if you have another card with the same bank you can move the credit limit to.

Also run down the list of who does CLI without HP and go down the list and ask for one.

Certainly close any subprime or credit builder accounts with an annual or monthly fee where you don't get your money's worth.

Re: Credit Cards after Refinance

SouthJamaica — Mon, 31 Jan 2022 02:01:43 GMT

@Anonymous wrote:
Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?

I wouldn't close any Chase cards. If you have one that's a real dog, product change it to something better.

Re: Credit Cards after Refinance

disdreamin — Mon, 31 Jan 2022 02:31:10 GMT

@SouthJamaica wrote:
@Anonymous wrote:
Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?
I wouldn't close any Chase cards. If you have one that's a real dog, product change it to something better.

The only caveat to that would be if you haven't availed yourself of a signup bonus with Chase lately, I wouldn't PC to anything with a lucrative SUB, if that kind of thing matters to you. I'd rather app for the SUB and PC the other account to a no annual fee card.

Honestly OP, if you're worried about running up cards, I'd get rid of all but the few (5-7) most useful cards and then be very careful with them. Try to treat them like debit cards and avoid buying or paying for anything you can't immediately pay off. If you meant you paid off $68k in credit card debt by doing a cash-out refi, that's an expensive and hard lesson, and I'd do everything possible to not end up in that place again (sounds like that's where you are). I don't think we can count of the housing market continuing the way it's been, so it may not be possible to get a redo if the cards were to be run up again.

Re: Credit Cards after Refinance

NRB525 — Mon, 31 Jan 2022 02:39:38 GMT

@Anonymous wrote:
Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?

Yes, that's a good plan. You recognize cards that will benefit you. If in doubt, close the others. Any card you have open needs your agreement that you will monitor it. Some of us do that, but you don't have to. Stick with what you are comfortable with, no more.

Re: Credit Cards after Refinanc

Anonymous — Mon, 31 Jan 2022 06:40:25 GMT

@disdreamin wrote:
@SouthJamaica wrote:
@Anonymous wrote:
Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?
I wouldn't close any Chase cards. If you have one that's a real dog, product change it to something better.
The only caveat to that would be if you haven't availed yourself of a signup bonus with Chase lately, I wouldn't PC to anything with a lucrative SUB, if that kind of thing matters to you. I'd rather app for the SUB and PC the other account to a no annual fee card.

Honestly OP, if you're worried about running up cards, I'd get rid of all but the few (5-7) most useful cards and then be very careful with them. Try to treat them like debit cards and avoid buying or paying for anything you can't immediately pay off. If you meant you paid off $68k in credit card debt by doing a cash-out refi, that's an expensive and hard lesson, and I'd do everything possible to not end up in that place again (sounds like that's where you are). I don't think we can count of the housing market continuing the way it's been, so it may not be possible to get a redo if the cards were to be run up again.

Thank you! I did do exactly that, refi with cash out, but luckily my mortgage is still well within my means. But it's still scary to know I have all this unused credit and maybe slip and get myself in trouble again. I am really hoping with age, I learned my lesson and not be foolish again. I will definitely be closing what I consider junk cards, with low credit limits and high interest rates that I got offered and took just because I could and have no real reason to keep. I wil keep the chase, citi and boa, 7 cards in all, down from 23.

Re: Credit Cards after Refinanc

blossom_rebuilding — Mon, 31 Jan 2022 15:34:19 GMT

@Anonymous wrote:
@disdreamin wrote:
@SouthJamaica wrote:
@Anonymous wrote:
Thank you very much for these very helpful tips. I guess what I'm looking for is what's the best way to manage all these zero balance cards. Store cards like target Macy's I can close no problems I will need to keep Amazon because my life depends on Amazon. I do have a Discover with $10,000 credit line I will keep that open. I will keep my Costco and American Airlines cards open and maybe one chase open like the Marriott chase. Definitely closing capital one bank of America in some off brand shop your Way card. And that sound like a plan? I am concerned that some of these cards would be run up again any ideas how I could lock them away like a liquor cabinet?
I wouldn't close any Chase cards. If you have one that's a real dog, product change it to something better.
The only caveat to that would be if you haven't availed yourself of a signup bonus with Chase lately, I wouldn't PC to anything with a lucrative SUB, if that kind of thing matters to you. I'd rather app for the SUB and PC the other account to a no annual fee card.

Honestly OP, if you're worried about running up cards, I'd get rid of all but the few (5-7) most useful cards and then be very careful with them. Try to treat them like debit cards and avoid buying or paying for anything you can't immediately pay off. If you meant you paid off $68k in credit card debt by doing a cash-out refi, that's an expensive and hard lesson, and I'd do everything possible to not end up in that place again (sounds like that's where you are). I don't think we can count of the housing market continuing the way it's been, so it may not be possible to get a redo if the cards were to be run up again.
Thank you! I did do exactly that, refi with cash out, but luckily my mortgage is still well within my means. But it's still scary to know I have all this unused credit and maybe slip and get myself in trouble again. I am really hoping with age, I learned my lesson and not be foolish again. I will definitely be closing what I consider junk cards, with low credit limits and high interest rates that I got offered and took just because I could and have no real reason to keep. I wil keep the chase, citi and boa, 7 cards in all, down from 23.

I absolutely understand this concern and have been there myself. So I am going to take a bit of a different tack on your ask, which is to close as many cards of the cards that you don't need as you want. Forget about maximizing rewards, etc. You are at zero balance so your utilization won't take a hit. Closed accounts still factor toward your AAoA. Keep the cards that you like best and actually use regularly, plus maybe one or two if you feel like you will need the utilization padding if you need to carry a balance at some point. My experience with rebuilding is that sometimes I wind up using cards that I wouldn't otherwise use for the sole purpose of keeping them alive or fear of "wasting" their rewards. Also, when you have a large number of cards with small(er) relative balances, it can easily add up before you realize. I truly didn't realize how high my overall balance was until I listed all the cards and balances in Excel.

All that to say, some people keep a large number of cards with a range of limits and manage them with no problem. Some of us prefer to keep a smaller number of cards and manage them just as well. Some strategize factors like rewards, APRs, annual fees, and good old fashioned brand loyalty in order to decide what cards they keep. I don't think there's any one right answer other than what you need to do in your situation to keep yourself on track and that might like look different from how others in the MyFICO fam operate. But you just had a massive accomplishment in getting your overall balance down to zero, and I hope you celebrate that! Hopefully I will be right behind you

Re: Credit Cards after Refinanc

disdreamin — Mon, 31 Jan 2022 15:53:49 GMT

@blossom_rebuilding wrote:
@Anonymous wrote:
@disdreamin wrote:
The only caveat to that would be if you haven't availed yourself of a signup bonus with Chase lately, I wouldn't PC to anything with a lucrative SUB, if that kind of thing matters to you. I'd rather app for the SUB and PC the other account to a no annual fee card.

Honestly OP, if you're worried about running up cards, I'd get rid of all but the few (5-7) most useful cards and then be very careful with them. <snip>
Thank you! I did do exactly that, refi with cash out, but luckily my mortgage is still well within my means. But it's still scary to know I have all this unused credit and maybe slip and get myself in trouble again. I am really hoping with age, I learned my lesson and not be foolish again. I will definitely be closing what I consider junk cards, with low credit limits and high interest rates that I got offered and took just because I could and have no real reason to keep. I wil keep the chase, citi and boa, 7 cards in all, down from 23.

I absolutely understand this concern and have been there myself. So I am going to take a bit of a different tack on your ask, which is to close as many cards of the cards that you don't need as you want. Forget about maximizing rewards, etc. You are at zero balance so your utilization won't take a hit. Closed accounts still factor toward your AAoA. Keep the cards that you like best and actually use regularly, plus maybe one or two if you feel like you will need the utilization padding if you need to carry a balance at some point. My experience with rebuilding is that sometimes I wind up using cards that I wouldn't otherwise use for the sole purpose of keeping them alive or fear of "wasting" their rewards. Also, when you have a large number of cards with small(er) relative balances, it can easily add up before you realize. I truly didn't realize how high my overall balance was until I listed all the cards and balances in Excel.

We are on the same page there. In my reply I mentioned the SUB as an aside, but my main advice was "I'd get rid of all but the few (5-7) most useful cards" and personally I would lean toward the low end of that. Five cards allows a useful store card or two and a few major cards. It gives flexibility if there's a glitch with a card, but it's a small enough number that a couple hundred on each doesn't add up to multiple thousands like having 23 cards all with small balances could.

Frankly, 23 cards would be too much for me to manage. I have seven, including a Target RedCard (not MC), and two of those are pretty much SD'd with only a small recurring payment (sub-$10) on each to keep them active. One I keep because it is by far my oldest card and the other because I have rewards I intend to use eventually. Once I clean those rewards out, that card is going away. I'd be much more comfortable at 5 cards tbh.

Re: Credit Cards after Refinanc

Anonymous — Mon, 31 Jan 2022 23:29:50 GMT

Thank! I am celebrating, specially since my cash flow will greatly improve! My payments per month were around $1700 per month, down to $400 (the difference between the old mortgage and the new mortgage payment) at a lower interest rate (3.5 vs 3.6) I know the cost of the refi through Rocket M. was steep, but I'm still better off month to month. I think keeping 23 cards is insane, definitely going down to the more reputable brands with lower rates and no fee. It's a big changer for me since I was actually thinking of BK only a few months ago, and this dramatically changed things. I sure hope the housing market remains since it was my savior and I still have $100,000 in equity that I didn't even touch. My new loan was less then 70% to value. Very happy camper here.