Yesterday I did something that I have been meaning to do for a while. Inside my filing cabinet I have a dvd case, and inside the dvd case I have stored several of my seldom used credit cards that I used to "build" my credit. I finally got around to closing these seldom used accounts. There are a couple of reasons that I decided to close these accounts.
1. I recently put together a list of all of my current accounts by number and status. I did this in the form of a spread sheet that will go with my living will. If something were to happen to me I want my loved ones to not have to worry about my financial mess, rather they will find that everything is organized and uncluttered. Closing these unneeded accounts was part of this process. When I saw just how many open accounts I currently had I knew I wanted to tighten things up.
2. With the new laws coming into affect this year chances are good that these companies will turn to hitting customers with inactivity fees in order to offset some of the lost gains this new law will take away.
3. Probably the most important reason that I decided to do some house cleaning with my cards was that I have decided to live 100% debt free for the rest of my life. Having 4-5 credit cards really made no sense. Actually it was just something in the back of my mind saying " oh you haven't used that card in a while, why don't you put $5 on it and then pay it so that it stays open " . And then every month while I was paying my bills I always had to check and make sure that the balance was $0 and often worried that maybe I would forget to pay one of those $5 balances. All in all, the little bit of stress and worry was not worth the offset of the little bit of a credit score hit I took closing the accounts.
I do still have 2 cards that I currently use. One is with my bank and the balance shows up on the same page as all of my other accounts with that bank, so It's very easy to maintain that card and not have to worry about a balance that I didn't know about. The second I use specifically as a gas card for my wife and me and we pay it off in full every month. My future goal is to move to a cash system for the gas and to close that card down. I'm not sure If I will keep the one card with my bank open or not.
On one of the cards that I closed the account manager was pleasant and didn't cause me much headache. But on the other card they treated me as if I were a 5 year old child who didn't know how to manage my accounts. They spoke down to me as if I were uneducated and had no clue as to how a FICO score works.
It took about 5-10 minutes of listening to the account managers bull before he finally did what I persistently asked for. By the end of the call my ears were beat red and I was fuming.
If you breath on a credit card application a card will show up in the mail, but to close down an account seems to take a shareholder majority vote, and executive approval from the CEO and CFO (not seriously, but they don't make it easy)
Now why would that be the case? Is it because the credit card companies are out to help us? Do they have our best interest at heart? If you believe that, than you have a long way to go in your financial journey.
A book and plan that I swear by, that has had made a personal huge change in my life is "The Total Money Makesover: A Proven Plan for Financial Fitness " - Dave Ramsey.
Discussion Question : Would you be willing to part with your credit cards? Why or Why Not?