Foo - Using Credit Wisely
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10-27-08, 04:47 PM
Had a question.
Lets say I have 7 credit cards with a total limit of $22,250. I only have a balance on one card of $2100 that is 0% right now and will be paid off soon, pry have to spend one month at the 9.99% APR. Then I am switching to another Credit card with 0% for 15 months and 8.99% fixed
Is it better to close the cards I'm not using or have credit cards open and just use my credit wisely. I thought it was to keep them open, because it shows credit agencies that you don't eat up all your limits.
I'm pretty sure I have awesome credit because of the rates i get on cards. I rent and do not have a house, but do have a car that i have a 0% loan from GMAC. I have never paid any interest my whole life. Also never had a late fee.
It is not good to close credit cards you're not using if you carry balances.
A major part of your credit score is the proportion of your total balances to available credit. You do best not to use more than 10% of your total available credit, which is about where you are now.
You should use your "dormant" cards once per month to maintain activity with the creditor. Outside of that, just keep doing what you're doing (using less than 10% of your available credit) and you'll do just fine.
Also, it's probably better not to open new accounts unless you need them, which you don't. Credit-seeking behavior will ding your score pretty hard.
You should use your "dormant" cards once per month to maintain activity with the creditor.
Is this really necessary? I have a card with almost a year of no usage and am wondering if I should get it out of the safe. It's the same company as my checking account, so maybe that's why it hasn't been a problem. Or it's a problem and I don't know it.
10-27-08, 05:16 PM
Make an excel spreadsheet charting your payments down to zero. Incorporate all cards in this.
Over the life of that debt the same "best rate" card may not remain the best. You can schedule
when good rates are due to run out so you can transfer balances on time. It will allow you to
easily see the big picture.
10-27-08, 05:23 PM
If you really want to make out, max out the cards with the 0% rate and put the money into a savings account, and when the period is up, transfer it to a another card with a 0% rate (assuming the interest earned on the amount is great enough to offset any possible balance transfer fees).
Hmm... maybe buy some type of securities with the 0% rate cards, so when its time to pay back everything, if you have any return at all, you pretty much have gotten free cash back. However, the 0% is usually only for a relatively short time, and there are usually some fees somewhere, so it may not be profitable.
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