Yet another credit card question.
July 28, 2011 4:21 PM Subscribe
Now that my credit is superawesome spectacular, can I get rid of the shitty low-limit high-interest credit-building card I loathe?
It is currently my only credit card, although I applied and was approved for a new one today (big limit, low interest, yays). I don't think I really need to worry about taking minor hits to my credit right now, as my mortgage was preapproved unconditionally, and I do not anticipate needing any kind of loan in the near future, but considering the heinous bullshit bureaucracy of our credit system in the US, I assume there is possibly something I am overlooking.
So can I ditch this crap card with its $200 limit and 39% interest or what?
It is currently my only credit card, although I applied and was approved for a new one today (big limit, low interest, yays). I don't think I really need to worry about taking minor hits to my credit right now, as my mortgage was preapproved unconditionally, and I do not anticipate needing any kind of loan in the near future, but considering the heinous bullshit bureaucracy of our credit system in the US, I assume there is possibly something I am overlooking.
So can I ditch this crap card with its $200 limit and 39% interest or what?
Yup. Paying a mortgage every month should do most of your credit-building from here on out, and you can always put revolving debt on the new one, should you desire to build more.
However, you don't really need to "get rid" of the crap card, unless it has an annual fee. You can just put in a drawer and not use it, unless the unlikely need arises.
posted by ignignokt at 4:27 PM on July 28, 2011
However, you don't really need to "get rid" of the crap card, unless it has an annual fee. You can just put in a drawer and not use it, unless the unlikely need arises.
posted by ignignokt at 4:27 PM on July 28, 2011
Response by poster: Right, but then I keep having to pay the annual fee plus the monthly minimum interest charge, even if I don't use it. (I have not used it in about 9 months already.)
What happens if I cancel it? Do credit thugs come to my house and kneecap me?
posted by elizardbits at 4:28 PM on July 28, 2011
What happens if I cancel it? Do credit thugs come to my house and kneecap me?
posted by elizardbits at 4:28 PM on July 28, 2011
Response by poster: Also, I should have mentioned - despite getting a new card, I have no intention of ever carrying any kind of balance on it.
posted by elizardbits at 4:30 PM on July 28, 2011
posted by elizardbits at 4:30 PM on July 28, 2011
Best answer: Age of accounts is a factor in your credit report (it's the only reason my credit score isn't as high as it could be, at this point) - keep it in a drawer unless there's a high annual fee.
Monthly minimum interest should only be charged if you use the card or have a balance - are you sure it's not another kind of fee?
posted by SMPA at 4:30 PM on July 28, 2011
Monthly minimum interest should only be charged if you use the card or have a balance - are you sure it's not another kind of fee?
posted by SMPA at 4:30 PM on July 28, 2011
(The account age thing is giving me an additional point every month I have my car loan, more or less. I was astounded when I saw the trend. However, your mortgage will be aging every month for, you know, years, so.)
posted by SMPA at 4:32 PM on July 28, 2011
posted by SMPA at 4:32 PM on July 28, 2011
Response by poster: Ack, I forgot about that account age bullshit. *flails* Okay, maybe I'll hang onto the card for another year.
(I also intend to pay off the mortgage within 5 years instead of 15, because fuck paying interest. Srsly.)
posted by elizardbits at 4:34 PM on July 28, 2011
(I also intend to pay off the mortgage within 5 years instead of 15, because fuck paying interest. Srsly.)
posted by elizardbits at 4:34 PM on July 28, 2011
Best answer: THIRTY-NINE PERCENT INTEREST?!?!
Not only should you get rid of it, you should BURN THEIR FUCKING HEADQUARTERS DOWN.
(NB: do not do this.)
posted by BitterOldPunk at 4:44 PM on July 28, 2011 [7 favorites]
Not only should you get rid of it, you should BURN THEIR FUCKING HEADQUARTERS DOWN.
(NB: do not do this.)
posted by BitterOldPunk at 4:44 PM on July 28, 2011 [7 favorites]
Okay, maybe I'll hang onto the card for another year.
If you don't keep using it, they might just close it anyway. I have an old credit card account I want to keep open, so I have my NetFlix bill automatically charged to it, and rarely use it for anything else. The only reason to close the card is the inconvenience of having to do this.
I also intend to pay off the mortgage within 5 years instead of 15, because fuck paying interest.
Since interest is tax-deductible, this may be less advantageous than you think.
posted by grouse at 4:46 PM on July 28, 2011
If you don't keep using it, they might just close it anyway. I have an old credit card account I want to keep open, so I have my NetFlix bill automatically charged to it, and rarely use it for anything else. The only reason to close the card is the inconvenience of having to do this.
I also intend to pay off the mortgage within 5 years instead of 15, because fuck paying interest.
Since interest is tax-deductible, this may be less advantageous than you think.
posted by grouse at 4:46 PM on July 28, 2011
elizardbits wrote: Right, but then I keep having to pay the annual fee plus the monthly minimum interest charge, even if I don't use it.
Minimum interest charge, what? Even when your balance is zero? Or is it a fixed monthly fee or what? I'm confused.
If it's just a $39 annual fee, it's worth the hassle of calling and trying to get them to waive said annual fee. If there's some monthly fee BS, you should ditch it once your mortgage situation is worked out. The average age takes closed accounts into account until they fall off, as best I can tell.
Also, you shouldn't do anything at all until you get your mortgage finished.
posted by wierdo at 5:32 PM on July 28, 2011
Minimum interest charge, what? Even when your balance is zero? Or is it a fixed monthly fee or what? I'm confused.
If it's just a $39 annual fee, it's worth the hassle of calling and trying to get them to waive said annual fee. If there's some monthly fee BS, you should ditch it once your mortgage situation is worked out. The average age takes closed accounts into account until they fall off, as best I can tell.
Also, you shouldn't do anything at all until you get your mortgage finished.
posted by wierdo at 5:32 PM on July 28, 2011
Somehow I missed the update that you have to pay for this every month. Yeah, ditch it as soon as possible.
posted by grouse at 5:46 PM on July 28, 2011
posted by grouse at 5:46 PM on July 28, 2011
You could try to contact them and ask if, given your improved credit score, they can convert your account to a different type. When I asked, Citi changed my oldest credit card, a plain vanilla account, opened during the Jurassic Period, to a "rewards" account. It still appears as the same very old line of credit on my credit report.
Maybe they would be willing to convert you to a no-monthly-fee account, if the alternative is you closing the account.
posted by BrashTech at 6:14 PM on July 28, 2011 [2 favorites]
Maybe they would be willing to convert you to a no-monthly-fee account, if the alternative is you closing the account.
posted by BrashTech at 6:14 PM on July 28, 2011 [2 favorites]
Also, you shouldn't do anything at all until you get your mortgage finished.
I'll amplify that point. I was told by the lender not to do anything that might affect my credit rating until the mortgage was signed.
posted by itstheclamsname at 6:38 PM on July 28, 2011
I'll amplify that point. I was told by the lender not to do anything that might affect my credit rating until the mortgage was signed.
posted by itstheclamsname at 6:38 PM on July 28, 2011
Best answer: If your credit is now super-awesome, go get a visa card from a major credit union with a low APR, no annual fee, 1% cashback and a $5000 to $10,000 limit. Then cancel your useless card, be sure you're received confirmation that it's been cancelled IN WRITING (even by fax if need be) and shred it.
posted by thewalrus at 8:24 PM on July 28, 2011
posted by thewalrus at 8:24 PM on July 28, 2011
Get your mortgage all nice and totally closed.
Then cancel the card without a second thought. (I can't imagine paying them money to do nothing, that's crazy.)
posted by desuetude at 11:25 PM on July 28, 2011
Then cancel the card without a second thought. (I can't imagine paying them money to do nothing, that's crazy.)
posted by desuetude at 11:25 PM on July 28, 2011
Response by poster: You could try to contact them and ask if, given your improved credit score, they can convert your account to a different type.
Unfortunately this is the only kind of card they have - shitty cards for people with shitty credit. The annual fee works out to 9.99/mo plus the 3.95 service charge for the privilege of paying the bill. (yes, really.)
Also, you shouldn't do anything at all until you get your mortgage finished.
Hm, I think my mortgage is pretty solid - it's magically linked somehow to the annual RMD from my mom's estate, so I don't know how much my credit will affect it. I WILL DOUBLE CHECK.
If your credit is now super-awesome, go get a visa card from a major credit union with a low APR, no annual fee, 1% cashback and a $5000 to $10,000 limit.
I actually just got one with air miles & a small annual fee! I am excited to embarrass the TSA by loudly faux-enjoying their fumbled gropings.
posted by elizardbits at 5:17 AM on July 29, 2011
Unfortunately this is the only kind of card they have - shitty cards for people with shitty credit. The annual fee works out to 9.99/mo plus the 3.95 service charge for the privilege of paying the bill. (yes, really.)
Also, you shouldn't do anything at all until you get your mortgage finished.
Hm, I think my mortgage is pretty solid - it's magically linked somehow to the annual RMD from my mom's estate, so I don't know how much my credit will affect it. I WILL DOUBLE CHECK.
If your credit is now super-awesome, go get a visa card from a major credit union with a low APR, no annual fee, 1% cashback and a $5000 to $10,000 limit.
I actually just got one with air miles & a small annual fee! I am excited to embarrass the TSA by loudly faux-enjoying their fumbled gropings.
posted by elizardbits at 5:17 AM on July 29, 2011
I need to disagree with what everyone else is saying - Do not cancel the card. Don't ever use it, but cancelling the card will go on your credit report. Shred it, burn it, use it as a dark backstop, whatever, but do not cancel it.
Especially with being preapproved for a mortgage, if you make any changes to your credit report - it can severely impact the mortgage process. Home buying 101, once the preapproval goes through, don't make any large purchases, change jobs, or affect your credit report. Every little thing will need to be explained. Or you'll need to reapply.
posted by lpcxa0 at 5:17 AM on July 29, 2011 [1 favorite]
Especially with being preapproved for a mortgage, if you make any changes to your credit report - it can severely impact the mortgage process. Home buying 101, once the preapproval goes through, don't make any large purchases, change jobs, or affect your credit report. Every little thing will need to be explained. Or you'll need to reapply.
posted by lpcxa0 at 5:17 AM on July 29, 2011 [1 favorite]
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posted by babbyʼ); Drop table users; -- at 4:27 PM on July 28, 2011