should we cancel our credit cards?

PinkandYellow

Thu, Jan 03 2008, 8:42 am

preface: we are not doing well financially (to put it mildly) right now but I've started a new job (yay) so this slump is (hopefully) temporary.

we have 3 credit cards. 2 with a small limit one with a big one. we are thinking of cancelling the big one. its causing us a lot of tzaros with the fees and stuff. the problem is that are bills are paid automaticaly from the big cc. you will say "cancel the autopays" however when we didn't have it bills were being paid very late (read: I'm lazy embarrassed

) and we incurred late charges. also, each card is charged about $30 a yr. about $15 isn't charged when we do 6 transactions or more per mth. if the bills are taken from the small cards we mite not be albe to use them for transactions adn we'll incur that extra $30 a yr for the two small cards. On the other hand, most of our income is in dollars in america. so instead of taking the money from there to put in our accts here to pay the cc we can just take the money from there to make purchases direct, bypassing the card altogether. otoh, its a big step to cancel a card and I'm scared of not having that back up and leeway that the card gives.
so I told dh I'll post here and find out what ppl think. please respnd, even if someone already writes what you think. please help.
Help

NotInNJMommy

Thu, Jan 03 2008, 12:07 pm

I've heard it's worth it to try to get the interest down, and yes, I think you should commit to not using credit cards and paying them off. If you don't rely on credit, you won't get trapped into debt with thousands just in interest.

Currently, we are paying our cc's off and IYH goign to cancel them...but we are sort of scared...

gonewiththewind

Thu, Jan 03 2008, 12:33 pm

I'm a little confused why you need three cc's. What's the point of the small ones? Also why do you have a cc with a yearly fee? There are plenty w/o them. YOu really got to try to pay atleast the minimum on time to avoid the late fees. If you tell your credit company you want to transfer your balance to a lower fee card and closr the account they can often make a deal with you. If you are starting a new job now, maybe you can pay off the cc with a gemach loan and work out a payment schedule with the gemach to save the interest.

PinkandYellow

Thu, Jan 03 2008, 12:41 pm

ok. I wasn't clear on one thing. they aren't real cc. I'm in israel. its more like a debit card. but the bank has this fee to use them. we started out with 2 small ones and when the bank saw how much money I was making they gave us a bigger one with a higher max usage. so there's no interest or late fee just these stam fees the bank charges for the heck of it.

ChavieK

Thu, Jan 03 2008, 12:51 pm

Im not clear on the fee situation. Is it $30 each card? If you use them they reduce the fees? Try to stick to just the one bigger card. Maybe make a midmonth payment so you still have credit available if you need it,I think that was one of your concerns if I understood corectly.

Tamiri

Thu, Jan 03 2008, 1:13 pm

You really need the credit cards, if you are being paid in U.S. dollars and can use the card to pay your bills here in Israel. It doesn't make sense to transfer the dollars over here, pay fees for the transfer, then pay to convert the dollars to shekels.
That having been said, a great lesson to learn is: a credit card is NOT a loan. It needs to be treated as cash. Meaning: Lets say you brought in $2000, then THAT IS ALL you have to use. Even if the purchase doesn't come off your bank account at the time of purchase, write it down in your accounting book as if it did.
People who use credit cards as anything else, end up paying fees.
You need to make the credit card work for YOU (the money in the checking account earns interest from the day of purchase to the day you pay the CC company), and not the opposite, you working for the credit card.

To Clarissa: Where in the world did you heaf that cancelling a credit card lowers your credit score? We had them and cancelled them according to our needs in the States, and nothing ever touched our score...
Is this perhaps something from recent years?

PinkandYellow

Thu, Jan 03 2008, 2:09 pm

in terms of the credit score thing, I know if you want to have a good credit rating in the US but don't have a cc its kidai to get a card, take money on it and then just pay it and then you've established good credit.

there is no interest. its a card thru the bank and visa. so I use the card all month and the bank automatically takes it out once a mth from the acct. I can have bils paid in cash or taken auto. from the acct not thru the cc. I could take my ame $$ and use it for purchases or I can depost it into my israeli acct to pay the cc tht I use for purchases. the cc is the middleman that I'm considering to cut out.
the thing with the fees, I spoke to hte bank customer svc today and they said these are the fees, totalling (b'erech) $30 a year but part of the fee isn't applied if you use the card for more then around 6 purchases a mth.

cassandra

Thu, Jan 03 2008, 2:25 pm

Tamiri wrote:

To Clarissa: Where in the world did you heaf that cancelling a credit card lowers your credit score? We had them and cancelled them according to our needs in the States, and nothing ever touched our score...
Is this perhaps something from recent years?

I am cassandra. Part of your credit score is the ratio of used credit to available credit. So if you have x dollars of credit and you are using y of it, and then all of a sudden you cancel a card, your available credit will go down, so your ratio will go up, and it will lower your score.

If you have really good credit you can cancel your cards one at a time (wait about three months in between) and it won't really affect your score. If you don't have good credit it is more a problem.

ChavieK

Thu, Jan 03 2008, 2:27 pm

$30 each card unless you purchase 6 items per card. Do you? It doesn't sound like you do. So if you are not using anyway get rid of it. You could still keep one, make the required purchases & have the benifits of having the card without the expense of 3.

amother

Thu, Jan 03 2008, 2:44 pm

Sometimes cancelling credit can raise your score. Between DH and myself we had over 1M dollars in available credit. We were not using most of our cards, but theoretically, we could max out all our cards at the same time and be a million dollars in debt. So we chose the cards with an annual fee and those with high rates and we cancelled them. My score jumped up from 680 to 720, which is huge.

Tamiri

Thu, Jan 03 2008, 3:19 pm

Cassandra I am sorry I wrote Clarissa. I am senile.

We ALWAYS took advantage of 10% off cards, Free mile cards, free Amex when it was offered etc. We thinned them out now and again. I never saw a problem, but that may have been cause we had excellent credit.
Is there any way to check the score for free these days?

cassandra

Thu, Jan 03 2008, 3:40 pm

Yeah, if you pay your balance monthly it's not going make a real difference.
If your credit score is 730 and is lowered to 710 it's not going to affect you much.

You can get a free credit report but you can't get your credit score for free.

(Don't worry- you aren't senile. Apparently it's a common misconception Wink

)