There’s been some good news and bad news in terms of my credit card problems.
My VISA is currently maxed out. My funds are slim and I was only able to pay the minimum payment on the card. After I paid my card, the interest came out: It was $3 more than the minimum payment, setting me back slightly further. Or, at the very least, it put me right back where I started–with a maxed out credit card.
So that’s the bad news.
The good news is that I was able to increase the limit on my 6.99% credit card and I’ve put in a request to transfer the balance from the higher interest rate card to the lower interest rate card. Woo-hoo!
That means I’ll pay less interest on the balance as I pay it down. I finally feel like I have control over that debtload.
I’m debating whether I should cancel the card outright or keep it as a sign of good debt. I think I will close the account. I now have another card that has the same limit, meaning I have plenty of credit (once the debt is paid off). I won’t use this card again. Some financial advisers like Gail Vaz Oxdale suggest that you shouldn’t own a card at the same bank as your bank account because they can take money out of your account without asking your permission (from It’s Your Money). While I’m not at a point where they’d even begin threatening to do that to me, I’m not too keen on giving them the option anyway. Like I said, I already have a card now that has the same limit (but with a better interest rate) and the “points” that I earn on the card are kind of minor. I plan on cashing the remaining points balance into a $100 gift card to Best Buy or Future Shop. It will go towards the purchase of a new laptop (aka my workhorse).
The other reason I’d like to cancel the card is because it may hinder me in the future from getting approved for a mortgage or car loan because I’ve got too much credit. Banks and lenders see too much credit availability as a liability because I may be tempted to use all of that credit and then not pay it back. While I would never do that, because the threat is there, it may be a better option for me to just close the credit card now before I make any plans to do some borrowing in the future. I really don’t need that card any longer.