Close accounts???

facingmyproblems

Hi all, I have just secured a good rate loan and paid off my 6 credit cards which has saved me so much money. One of my credit cards was 24.90%! Question is do I close down my credit card accounts, or keep them open? Or close down some of them? Thanks in advance 

DailyHail

If you can’t trust yourself not to use ANY of the cards while you pay off the loan, you should close them ALL down.

Ebe_Scrooge

24% is not at all unusual for even a mainstream credit card to be honest.

The main danger in consolidation loans is that you clear the cards then merrily go out spending on them again, meaning you're soon looking at double the debt you started with.

IF you can trust yourself to be super-disciplined and only use the cards for essential and affordable purchases, then keeping some of them open is a good way to build up a favourable credit history (use them for everyday essential purchases and ALWAYS repay in full every month without fail).

But given that you've had to resort to a consolidation loan, the prudent advice is probably to close them so that there's no temptation to run up further debt.  When you've got the loan fully repaid, you can look at taking out a new credit card in the future - if, indeed, you even need one, and if you can trust yourself to use it responsibly.

MovingForwards

I'd actually say close your credit cards, focus on paying down the loan and building up healthy savings to avoid this happening for the third time.

facingmyproblems

Thanks for your comments so far.  I’m interested as to what it does to your credit file if you close credit cards 

Alex9384

facingmyproblems said:

Thanks for your comments so far.  I’m interested as to what it does to your credit file if you close credit cards 

Do NOT close multiple accounts at once!
That makes it look like you've done something really bad and multiple lenders tried to get rid of you.
I have 6 credit cards as well. Even if I didn't need them at all, I would still keep at least 2, preferably the oldest two. Long standing accounts look good on your credit files, as long as they have a good history.

I would suggest to close 4 of your cards and keep the 2 oldest, or most useful, i.e. with rewards or with some 0% offers on them. But close them one by one with a few months in between each. Which one is the most useless to you? For example, highest APR, or lowest credit limit? Start with that one. Then after a few months, close another one, and so on.

DailyHail

Alex9384 said:

Do NOT close multiple accounts at once!
That makes it look like you've done something really bad and multiple lenders tried to get rid of you.
I have 6 credit cards as well. Even if I didn't need them at all, I would still keep at least 2, preferably the oldest two. Long standing accounts look good on your credit files, as long as they have a good history.

I would suggest to close 4 of your cards and keep the 2 oldest, or most useful, i.e. with rewards or with some 0% offers on them. But close them one by one with a few months in between each. Which one is the most useless to you? For example, highest APR, or lowest credit limit? Start with that one. Then after a few months, close another one, and so on.

Erm… sorry but no.

Why would it look like anything else apart from closing an account with a settled balance?

Any further search of a credit file would show:

a) a new loan and 
b) corresponding credit card debts in roughly the same amount settled and closed.

The algorithms are pretty smart you know.

The OP has gone down the route of consolidation which we all know rarely succeeds… the one way it does succeed is by immediately closing down all lines of tempting credit.

imho even leaving one open after a consolidation is a slippery slope (1 ‘emergency’ turning into 2 ‘emergency’s’ etc etc). Especially as the op hasn’t identified how the multiple credit card debt was accrued in the first place.

Be sensible. Close them all down. Live within your means and overpay as much as you can in the loan.

Alex9384

DailyHail said:

Erm… sorry but no.

Why would it look like anything else apart from closing an account with a settled balance?

....

The algorithms are pretty smart you know.

From reading dozens of threads and hearing from other users, banks will always assume the worst things possible about you.

Applying for new accounts because you want switch bonuses? Omg, hungry for credit!

Going regularly over certain percentage of your limit? Omg, relying on credit too much!

Carrying card balance because it's still on a promotional 0% rate? Omg, he's struggling to pay it off!

No... neither their algorithms, nor real people are that smart at banks. For example Co-op were "worried" that I might rack up too much debt when applying for their reward card, despite having a couple cards with zero balance on them (why would I have those if I wanted to rack up debt?), and another couple with higher utilisation but still on 0% rates. Why would I be applying for a rewards card instead of 0% or balance transfer cards if I was in financial difficulties? Geez...

Then TBS are unable to figure out that I'm sending money to my own account - amended existing standing order which was already paid out before. Still the same account details, just amended the payment reference. First their algorithm locks me out of my account, then I get SMS that they're doing checks, and then another SMS that I need to call them (because obviously no one could figure out what's going on, wow!) Today I spent 47 mins. waiting on the phone, until someone answered and immediately hung up after 1 second. I was fuming... No, they are not smart, they are often totally clueless.

DailyHail

I don’t know why you’re dragging your own problems with banks into the thread, but ho hum.

Alex9384

DailyHail said:

I don’t know why you’re dragging your own problems with banks into the thread, but ho hum.

I see you don't know. It's called an example. Remember it. That doesn't mean it's the only case when such things happened.

Apart from that, I literally said that my opinion in based on reading dozens of threads and claims by other forum veterans. Banks like to interpret your behaviour in the most negative way "just in case". And they are often clueless as well.

You don't have to believe me. Just read through a hundred threads and see for yourself.

cymruchris

facingmyproblems said:

Hi all, I have just secured a good rate loan and paid off my 6 credit cards which has saved me so much money. One of my credit cards was 24.90%! Question is do I close down my credit card accounts, or keep them open? Or close down some of them? Thanks in advance 

Whatever you do - whatever decision you take - you CANNOT get yourself back into the same position again. I'm very glad you've got an attractive APR loan - but IF you manage to start spending again, and end up with double the debt, you'll likely not be so lucky next time. (It's obvious to an extent - but not everyone acknowledges it, even if they know it). With your new monthly payment, you might start to think how you can afford to spend a bit more now, have a few treats, maybe a little holiday, and to put it on the credit card because it's quite manageable - and before you know it you'll be back where you started.

So...... If you can be the absolutely amazing person that doesn't get back into that situation, and fully understand how easy it is to get there if you go spending willy-nilly.... Then I'd initially keep all cards open - no panic. Then I'd look at my highest APR - and close one. Then I'd wait a few months, and close a second. Then a few months to a third. 

I'd hold your BEST three cards for limit/benefits/lower APR.

All the while ensuring any spend on any card is paid in FULL each and EVERY month without fail.

If however you feel it might be easy to drop into old habits, and easily make excuses as to why spend is 'essential' on that nice new shiny Ipad, then yes I'd work at closing them sooner than later. In terms of your credit history, there may be a short term 'blip' in your magic credit score (that only you see) - but with the continued payments of the loan on time, your utilities, your mobile phone, or any other recorded account, you'll see it recover. 

We'll all have different opinions on what to do - that's mine