Credit Cards after Refinance

[Anonymous]

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. 

[FinStar]

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...?

[Anonymous]

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. 

[SouthJamaica]

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@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. 

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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.

[Anonymous]

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@SouthJamaica wrote:

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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.

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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.  

[Anonymous]

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?

[Anonymous]

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.

[SouthJamaica]

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@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?

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

[disdreamin]

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@SouthJamaica wrote:

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@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?

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

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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.

[NRB525]

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@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?

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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.