Recent Divine Discussions

Tuesday, September 18, 2007

I paid off a credit card

I paid off my Office Depot card yesterday. Balance was $152.31 and now it is a big fat $0. I am so happy. :-D

Did I ever tell yall that I have 13 credit cards?



(silence)



Well........I do.



As you can see the interest rates are horrendous. For a while there, I thought they were normal. Uh no sweetie......they aint! LOL. Anyways, out of the 13, I would like to keep 4 of them and close the rest. The 4 are the oldest of all my cards. That way I can keep my credit history. I have been thinking about when and how I should close the other 9 out. I need to do them one at a time and spaced out. I don't want to close them all at once. That would be a big hit on my credit score. I set it up so that I close one every two months or so, starting next month. I am also closing out in order of credit limit, with the smallest limit being first. Hopefully this system works and my credit score won't take to much of a beating. I have the last card closing out around the time I would like to start up my home purchase process again. But thats just an estimate.

Looks like I have a nice chunk of money remaining in my budget. I can't figure out where it came from. So I won't be messing with it until I do. It's over $100. Once I do my end of the month and I see that all bills are accounted for then I will most likely take a $100 and apply it to the next credit card in the snowball line and deposit the remaining into my Misc account.


10 comments:

Tough Broad said...

Congrats!

SingleGuyMoney said...

Office Depot has a credit card??? I guess most stores do these days. Anyway, congrats on knocking out that balance.

Dimples said...

@ tough broad

Thanx

@ Single Guy

Yeah. Majority of my cards are store cards. LOL. Thank ya.

Mya Moola said...

Congrats girl! I know that felt good.. and um, yeah, I have 12 revolving accounts, so no judgement over here.

I'm trying to figure out the best route to take in regard to closing accounts also. Ideally, I'd only want to keep my Amex, and one other major credit card. I know you're supposed to spread it out over time but I'm kind of anxious to just be done with the accounts as soon as I pay them off. I'm at least a year or two away from any major purchases (house, car) so I think I may just close them out month by month as I pay them off, and take the temporary hit to my credit score. But I'm still undecided. Amazing that your credit score hinges on having more credit at your disposal, instead of being financially solvent and using cash.

I Am Fabulous!!! Deal With It... said...

I thought we were to never close cards because we lose credit history. I 'think' I also read somewhere instead of closing the cards, you should simply cut them up. Um, let me know. I guess I am misinformed.

Way to go on that credit card balance of $0.000!! Feel good doesnt it. You are on your way girlfriend

Dimples said...

@ Mya

At least try and close one per month. how many do you have to close? I won't have all my cards paid off at once so that is one of the reasons I am paying them one by one. I close them about a month or two after I paid them off. Let me do some research and I will do a post on this and credit score related info.

@ I am Fab

I'm keeping 4 of my oldest cards open. In order to keep my credit history. Credit history is the length of time that you have had credit. It is not measured by the number of cards you have. Actually the number of cards you have can negatively affect your credit score.

Don't take my word on this. Let me do some research and I will do a post on this. Mya had some questions on how to close cards also.

Mya Moola said...

Dimples, yes let's make this our new research project. The best exit strategy from credit card accounts you no longer want.

I Am Fab, you're right, the experts say don't close them because it can cause a temporary dip in your credit score, but for me, cutting them up and still having the accounts to maintain would be a pain. Even if you're not charging anything new, you have to stay up to date on your accounts to be on guard against fraudulent charges, etc. I also tend to move apartments every year, and don't want to have to deal with updating statement, etc.

Overall I think I'm willing to take a temporary dip in my score just to be rid of the things. I'm like you Dimples, I'll be paying off a card every month or so, so may just space out the closings. Although, in terms of the ratio, I'm thinking if all of my cards are nearly maxed out, canceling them shouldn't have a huge affect on my score, since the ratio will of use to available will stay pretty much the same?

Expect a post on this topic soon on my blog (as opposed to in your comments lol)

Sistah Ant said...

Congratulations on getting a zero balance! That ALWAYS feels good.

Sistah Ant said...

I am fabulous - I think sometimes we should beware of the word "never." There are a few factors you need to consider.

First, consider the age of your cards. Cancelling your oldest credit cards is not the best idea because the average age of all your accounts affects your score, and if you're going to cancel cards, you don't want to cancel the oldest ones which increase (improve) your average age.

Another factor is the ratio of credit limits to your actual balances. Say you have two cards, each with a $500 limit, for a total limit of $1000. One card has a balance of $400. The other has a balance of $25. Then you pay off the $25 balance and cancel that card. At one point, you were using $425 of $1000 - 43% of all of your available credit. But when you cancelled your second card you were using $400 of $500 - 80% of all of your available credit. That looks worse!

So there are pros and cons to cancelling cards. I cancelled a few extra cards 7 or 8 years ago because I wasn't using them and didn't want the temptation of using them. I was still in the process of building my credit- my history was only about a year old - so I had little to lose at the time, and plenty of time to recover (hence my great score now). But people with longer and better histories should be more careful with it, since they have more to lose by making mistakes.

Rad said...

Dimps

congrats on your zero balance girl, i know that must feel nice :)

About closing them around the time you start the home purchase trip again. Be careful with that, if it adversly affect your score it will mess with the rate you can get on that mortgage. you know i'm not an expert but I would hold off until I am done with all of the mortgage application before I start closing the cards. You can cut them up if your afraid that you'll use them again. If not, just leave them with zero balances and then close them out like you had originally planned. About every 3 or 4 months, one at a time.

Just my .3 cents