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Close Accounts or keep them open?


DunDone
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My DW and I just paid off CC's with a bonus that I received. They were all pretty high balance and pretty high interest rates. . . so should I leave them open or would we be better off closing them they are not terribly old. . . maybe a couple of years. Got into them with the low introductory rates but as the interest rate climbed they were really expensive. . .

Chase Visa $24,000 paid to $0

Providian V $6,200 paid to $0

Providian MC$6200 paid to $0

Capitol 1 $3800 paid to $0

Union Plus $6200 paid to $0

I would be happy to close them, but want to maximize the effect paying them off will have. BTW, we cut up every one of them as soon as we paid them off.

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In my opinion, review which ones have the better interest rates and longer histories and keep those.

Keep your balance BELOW 30% on charges. Only charge them when you absolutely have to, but if you need to improve your credit make SMALL charges on one or two of them each month. Pay on time, pay in full each month if you want to build that good credit history (unless this isn't an issue for you) and go from there. If it were me and my credit was good/fine, I'd sock drawer some and possibly close the ones with junky interest rates/fees.

Take note about which card charges a yearly "fee" or some maintenance fee per month....maybe omit those cards? If you don't carry a balance you're paying for nothing really other than a positive TL and that may be worth it to you.

As for the ones with higher interest rates, try calling later and asking them if they can improve that interest rate...if not, be polite and maybe consider quietly closing out the account.

In closing credit accts your FICO will drop, I don't know by "how much" because it depends on a few factors (like the ages of the accts, overall utilization, etc) but you have to weigh the positives and negatives. If they aren't good cards and if they have crappy interest rates it may be better to get rid of those so that you don't fall into some trap with the card later. You'll also avoid any possible ID fraud type charges by closing those accts. Just keep "proof" that you closed them and keep that in a file for YEARS.

If it were me, I'd at least keep the Chase and the Union Plus. Capital One doesn't report credit limits so I hear that actually hurts your utilization amounts...

Elyse

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If you just paid them off, I would do nothing for, say, 6 months, so you can get some history built. If you need to use a credit card, use just one of them and watch your utilization rate. Avoid the Cap1 card, for the reasons given above. Later, I would keep the oldest ones, and the ones with the best or longest history.

Now, if you also use gas and store cards, then I'd wait the 6 months then get rid of all but two of the MC/V.

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