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    Why keep them?

    I keep reading on here about people keeping credit cards but not use them.
    They profess to never carry a balance. They lock 'em up and don't charge even a lunch at McDonalds to keep them active.

    I understand how utilization and age of account effects FICO score.

    I have several cards totalling $150,000 in credit limit. Cards range in age from 1992 to 2002.

    I have no balance on any of them. Anymore

    I probably charge $2k a month in expenses and pay it off each month.

    I just don't see the need to have all these cards. If I buy something for myself, I usually use my debit card.

    I'm thinking I should just keep my Amex card which has a $25k limit and it's age is year 2000. I could keep my Citi card (1992) as a backup (limit $25k). Close the rest. Or maybe just keep the Citi card.

    I can't see how this would ding my score. One card seems plenty, but all your eggs are in one basket.

    #2
    Personally, I'm not currently charging anything on my credit cards, and I don't intend to use them any more after I have them all paid off. I really don't know why people want to keep unused credit cards, unless it's for a sense of security for the "what ifs" in life.

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      #3
      I have 30+ cards, and I keep one of each type (Amex, VISA, MasterCard) in my wallet for use (PIF each month). All the others are locked up in my safe. I could care less if they were closed, and every once and a while they close one due to inactivity. If I closed them all, I don't think it would change my FICO much because my utilization is always near 0%, and the cards in my wallet are old enough to keep my average account age high.

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        #4
        I only have one card now, and it's limit is $500. It is linked to my ExpressToll transponder account. So it only gets a $35 charge on it once every few months. I keep this card on here (rather than use my debit card) because I just don't know when the account will refill itself, so I don't want an unexpected debit on my checking account.

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          #5
          Nothing wrong with your plan.

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            #6
            I don't belive in keeping credit cards that are not going to be used. I use all my credit cards at least once every three months. I always pay the balance in full to avoid finance charges. I have three major credit cards and three store cards that I use for my favorite stores. I'm thinking of getting a fourth card for my favorite store since I always shop there.

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              #7
              We use none and yet we keep ours because we are too lazy to call and cancel them...wouldn't bother me in the slightest to have only 2. (might be a bit uncomfortable to have none...)

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                #8
                Originally posted by wincrasher View Post
                I keep reading on here about people keeping credit cards but not use them.
                They profess to never carry a balance. They lock 'em up and don't charge even a lunch at McDonalds to keep them active.

                I understand how utilization and age of account effects FICO score.

                I have several cards totalling $150,000 in credit limit. Cards range in age from 1992 to 2002.

                I have no balance on any of them. Anymore

                I probably charge $2k a month in expenses and pay it off each month.

                I just don't see the need to have all these cards. If I buy something for myself, I usually use my debit card.

                I'm thinking I should just keep my Amex card which has a $25k limit and it's age is year 2000. I could keep my Citi card (1992) as a backup (limit $25k). Close the rest. Or maybe just keep the Citi card.

                I can't see how this would ding my score. One card seems plenty, but all your eggs are in one basket.
                We're not very different. I use 2 or 3 of my credit cards each month and PIF with each as they come due. The reason I use separate ones are because of rewards in the main; one earns 5% cash back for all gasoline charges, the other has different rewards, and the third is fro people who don't/won't take Discover (dentist, doc, auto mechanic, etc). One of these Discover cards has been in my possession since the late 80's.

                I have 3 other cards that I do not use, but still keep locked up. and I don't care if they are closed.

                One card would be "all your eggs" -- if that one company closes, then you'd have to start all over so to speak.

                As another poster said, these also the fact that insurance companies, headhunters (job requirements could require a high score in "bonding", certifications for security clearances, etc) can also look up credit "worthiness."

                But each person should do what they are comfortable doing. There's no right nor wrong in this instance.

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                  #9
                  Clark Howard says that not using (and paying off) your credit card will result in the cc company closing your account, which will then lower your credit score. I don't subscribe to that thought, however factual it may be. We have 1 cc which we use and pay off monthly. That works best for us.

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                    #10
                    I have 10 cards, and a good amount of debt spread across 4 of them. At this point, I would not close any of them, because of the impact to my FICO score (credit utilization percent would go up and FICO would go down).

                    The second reason to keep them open is to have more opportunities for low interest balance transfer offers. I am in a serious debt reduction program, which is accelerated with low interest offers. I currently average less than 3% interest, which means that about 95% of everything I pay monthly goes towards principle reduction. This is working really well so far.

                    Finally, I have only a small emergency fund right now, which I'll grow after my CC debt is paid off. But until then, the credit on my card accounts can be used for dire emergencies as a last resort.

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                      #11
                      You really should build your emergency fund prior to paying down your debt.

                      Should you loose your job, you'd wreck your credit if you couldn't make timely payments. Don't kid yourself - everyone is vulnerable in this economy.

                      Take advantage of your low interest situation to build your EF. Then aggressively pay down your credit cards.

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                        #12
                        wincrasher, the approach I'm taking seems to be consistent with what Dave Ramsey proposes. He says to start with a small EF first ($1,000), then eliminate the CC debt, then build up the emergency fund (3-6 months expenses). There might be something to be said for taking advantage of the low interest rates to instead build up the EF. The debt is not as bad if its low interest. Something for me to ponder, thanks for the suggestion.

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                          #13
                          I keep several cards so that I can charge a planned, expensive item immediately after billing date. That gives me a minimum of 3 pay cycles to accumulate the funds to pay out CC without cost of credit.

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                            #14
                            You need to this of it this way -

                            What if you went into work on Monday and the place was locked up? Or they handed you your pink slip.

                            If you think your $1k will carry you to your next job without disrupting your finances, then fine, you have enough.

                            EF is for circumstances like that. What if you wrecked your car over the weekend? What if your house burned down?

                            You never know when life throws you a curve ball.

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                              #15
                              Pay ahead, not afterward...

                              Originally posted by snafu View Post
                              I keep several cards so that I can charge a planned, expensive item immediately after billing date. That gives me a minimum of 3 pay cycles to accumulate the funds to pay out CC without cost of credit.
                              I go from the other end. I have three savings accounts which I pay into every month. One is for emergency funds; the second is a special account that pays a dividend after maintaining it for a year. (I got into this one just before they closed it, and I don't know if it will be repeated.) The third is one that pays a reasonable interest rate, and it's easy to transfer funds from it to my checking account when I want to buy something unusually expensive. Knowing that the transfer time is 2-3 business days gives me time before buying to change my mind if I talk myself out of the purchase. I have actually transferred money BACK into that account when I decided against a purchase!

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