And then there were 7â€¦credit cards
A couple years ago, when we were rolling in debt, specifically $20,000 worth of credit card debt, I avoided accruing interest by opening new credit cards with a 0% balance transfer offer. Well, those days are in the past, both of our credit card debt AND easy 0% offers (with fee limits).
During that time, I opened a few cards and closed a few, but I’ve always sort of kept a core group of credit cards in our arsenal. I’m not a pro like some people when it comes to getting the best (I don’t even have an AmEx card anymore) or taking advantage of all the rewards programs. I tend to just carry a debit card and 2 credit cards at most, and those 2 credit cards are usually my Penfed Visa and my Discover More card.
Really, I only use the PenFed card primarily and keep the Discover card for our Sam’s Club membership, but sometimes I remember the rotating Discover categories (travel and restaurants in Q1 2011) and I’ll use it to get 5% cash back. But what about the rest of our credit cards?
Well, we had 9 cards total, and I decided to cancel 2 of them today:
- Pentagon Federal
- Discover (personal card)
- MINI (yes, the car…one of the legacy cards from the balance transfer days, but it has a great limit)
- Kohls (our only store-branded card)
- Bank of America (the only non-rewards card)
- Discover (business card)
- GM Card (again, from the balance transfer days, but this one has a tiny limit)
I cut the last two for a reason. First, I haven’t used my Discover Business card in 2 years and the More card gives me better rewards. That was an easy one because business cards don’t appear on your credit history.
Next, I dropped the GM Card. That was a tough one because of one reason: I had over $600 in earned rewards. Unfortunately, the points are only good for buying a new GM vehicle or GM parts, which I have no plans to do anytime soon. The limit was under $2000 and it wasn’t my oldest card, so there’s little impact on my credit score.
So that leaves us with 7 credit cards. We only use the Kohls card rarely when we get a really good coupon. We could probably find better deals in other stores and use our other cards for rewards. I never use the MINI card, even though points earned go towards MINI parts (and we have a MINI), but it has a high limit. I don’t use the Citibank card either (they just changed it to a different type of card, so I need to check it out more).
That leaves Chase and Bank of America. They’re my two oldest cards, and my Chase card is now a Chase Freedom card with rotating categories that competes with my Discover More card. Worth keeping.
The Bank of America card is my oldest card and it has a really high limit. The downside is they only offer teaser rewards for about 3 months. I used to have 2 BoA cards, but they closed one due to inactivity, and I only use this rarely to keep it alive. After learning more about the new way they calculate credit scores, I’m tempted to just cancel it and take the ding. We’re not financing anything anytime soon and it’s just a burden to manage (just knowing it’s there and can ding me when I don’t want it to is the burden).
So we have the opportunity to chop up 4 more cards and reduce our stack to 3, but it’s a tough call. I know it will hurt my credit score, especially since I’m considering dropping my oldest card and also cards with high limits. I maintain maybe a 1% utilization, which is nothing compared to the 50-75% I used to carry (or higher), so upping it to 5-10% shouldn’t hurt in the long run.
How about you? Have you dropped a bunch of credit cards all at once? Care to share which ones and why? Did you lost rewards/points in the process, like I did with the GM Card?