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New CC?

January 3rd, 2016 at 04:46 pm

So I'm in the process of restructuring our finances so that we can handle them together now that we're married. DH and I opened a joint checking account, which is what we'll use to pay for all of our expenses. I think we're both going to close our personal checking accounts and just each have a credit card to use when we want to purchase gifts, etc.

So I have a personal checking, savings, and credit card with my current bank. My savings account currently holds my tax savings - which I'm going to transfer to my business account (which is where it needs to be anyway) and then open a savings account for my business so I can keep things separate. Money from my checking account will be transferred to the joint account. And then I'll have my credit card.

It currently has a balance of about $2,200. I get charged roughly $35 in interest every month. In Mint today I saw a suggestion of getting an Amex Blue Cash Preferred card, which would give me 0% APR for the first 15 months. I'm thinking I might open that card and transfer my balance, to save on that interest, and then close all of my accounts with my current bank to make a clean break. I haven't really been spending with that card (it's been near its max, and I've been trying to pay it off). At that point, I would only use the Amex for business expenses (as needed), and I would pay off my Amazon Points Visa and use that one for my personal expenses (mainly just gifts for DH and anything that might pop up as an emergency).

My current CC is my longest standing, though. I'm not sure if my credit score would suffer terribly if I were to close that account. I have another CC that I need to close (that I don't ever use and didn't even want. Long story). I know closing these things will have a negative impact, but not sure for how long. Or if it even matters - DH and I have no plans of purchasing a home anytime soon, nor any vehicles. And I'm pretty sure his credit score is stellar. Kid has almost no debt (god bless full rides to college).

So for a savings about $420 this year, it seems to make sense. Because I'm saving for my tax payments, I'm not going to have the opportunity to focus on the CC for a while (beyond making my slightly above minimum payments).

Any thoughts would be appreciated Smile Thanks, everyone!

Posted in Daily Little Blurbs, Saving | 7 Comments »

7 Responses to “New CC?”

  1. Ima saver Says:
    January 3rd, 2016 at 06:23 pm 1451845394
    1451845394

    I would get the Amex card which is at 0% interest right now. Transfer the entire balance to the new amex card, but you do not have to close the old card. Just don't charge anything more to it. It will show you with a zero balance, which might even help your credit score.
    I do use charge cards to get the cash rewards every month, but I pay the balance off in full every month too, so i never accrue any interest.
    Hopefully, you can soon get to that point, where you can pay off the balance in full each month.
    I keep track of what I charge. Then I take the cash for what I just charged, put it in an envelope and save it to pay off the charge at the end of the billing cycle.

  2. MonkeyMama Says:
    January 3rd, 2016 at 09:40 pm 1451857219
    1451857219

    I don't know how much it affects credit score. Personally, it's never affected our FICO scores at all to close old credit cards. But of course, in different situations it affects things differently.

    Given the unknowns, I'd close the credit card that you don't use or want. & then monitor your score and see if it takes a hit. If nothing dramatic happens, then close the other card too and move on. Either that, or just close them both because you don't really seem to have any pressing need to have a good score to borrow. & of course, apply for the new card first before closing any old ones, just in case it does ding your credit.

  3. creditcardfree Says:
    January 3rd, 2016 at 09:44 pm 1451857463
    1451857463

    I agree with MM on the scores and the way to approach them. It can ding for about six months, but tends to slowly drift back up if all else stays the same from what little I've noticed for us.

    The only thing to consider is if there is an annual fee. And will the interest rate go back up at the end of the 15 months. Will it be more than your current card. Not that it is a deal breaker since of course 15 months at 0% is worth quite a bit. Can you make the effort to pay that balance off in 15 months? At 0% interest it would take $146.67 per month to pay it in full in 15 payments. Can you make that happen to be free of the debt! That would be the best case scenario!

  4. pjmama Says:
    January 4th, 2016 at 12:02 am 1451865777
    1451865777

    These are all great suggestions, everyone! I think it makes sense to open the new CC to transfer the balance either way - and then close the one I don't want/use first to see what happens. @CreditCardFree - there is an annual fee of $75. That's outweighed by the savings for sure, and ideally I would want to pay it off in the first year. I think that would definitely be do-able.

    I suppose I could also look into other CC offers with 0% interest to see if there are any out there that don't have an annual fee attached to them as well...

    Thanks, everyone!

  5. VS_ozgirl Says:
    January 4th, 2016 at 03:14 am 1451877249
    1451877249

    As someone who got so sick of being charged interest that I went down the road of getting a 0% credit card, I would highly recommend it. I have used the method of dividing the balance by the number of months it is interest free and paying that amount as if it were a loan repayment, because technically it is. I did get stung with a $60 annual card fee upon opening it that I was not thrilled about, and then a couple of months later getting stung with another $60 annual card fee on my credit card that I use regularly! Not stellar. I will be looking for another main card to use which is low interest (the lowest my bank offers is 13.49%) and low annual card fee. Anyway, 0% is the way to go! Also with my husband's business we have his business account plus another bank account which we save a portion of whatever he receives for tax; so in your case, I highly recommend continuing on with that.

  6. pjmama Says:
    January 4th, 2016 at 02:16 pm 1451916963
    1451916963

    @VS_ozgirl: Thanks for the feedback! I'm sure getting hit with those fees is painful, but in the end if you're saving money overall it seems like a fee well worth it. And I plan on doing the same - opening a savings account for my business to keep all of my tax savings for the year, in 2016 transferring about 30% of everything I make into that account. Great recommendations!

  7. debt-free by thir-ty Says:
    January 4th, 2016 at 04:01 pm 1451923261
    1451923261

    I recently closed my oldest card and didn't notice that much of a drop. It was my oldest by 2-3 years, so I was expecting a big hit, but I think I only lost a few points and it's recovered since then.

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