My credit card debt should be completely paid off by the end of October (if all goes as planned), and I really, really want to just cut up that card and never ever ever have one again (just using a bank debit card from now on!)
But are there any problems that people ever run into because they don’t have regular credit cards? I had to rent a car this summer, for example, and they explicitly said in writing that they would not take debit cards, checks, or cash to pay for that rental-- JUST an actual credit card. What could anyone possibly do if they didn’t still have a regular credit card in that situation?? Are there similar situations that ever come up? I would be so happy to get rid of this thing and get away from Wells Fargo for good that words can’t even describe it, and it seems like there’s GOT to be a solution to this. Ideas, please!!
In the world we live in, it is a good thing to have a low-limit credit card. Mine is only up to $1000. I would not recommend having no credit card - there are many things that are much easier with one (buying online, renting cars, reserving hotel rooms, paying for hotel rooms, etc.). You have to change how you think about it, maybe - my credit card is used rarely, and paid off when it is used.
Cutting up a card does not cancel the account (if you cancel it, it may affect your credit rating). It’s just a method to prevent the user from all too easy access to overspend. Nothing but your willpower will prevent you from calling your bank and having them issue you a replacement card. But you know that.
If the temptation is so great that cutting up the card is your best recourse, then perhaps some counseling is in order. If your self-discipline is better than that, take the card, suspend it in a Tupperware container of water and put it in the freezer. The card will be available, but not until after some work. Perhaps by then, more than your temptation will cool.
My insurance policy doesn’t cover things like counseling.
Anyway, the idea of just plain canceling the regular credit card is so appealing-- I really wish I could do it. (I don’t know what Dave Ramsey does… he keeps saying to get rid of any standard one you might have…) If you have to keep something, what’s the best low-limit card to have?
I don’t know about other countries, but here in the UK you can get “prepaid credit cards”, which are accepted like regular credit cards but have to be “loaded up” with cash, so you can’t spend money you don’t have.
You could get one of those and, provided you had the cash accessible, load it up if you needed a credit card e.g. for car rental. It would need a bit of forward planning, though, if you didn’t want to leave your cash just sitting there on the card earning no interest all the time.
Most major bank debt cards have a Visa or Master Card logo on it; and will be accepted where ever that Visa or Master Card are accepted. I don’t have any credit cards, and use my debit card for hotels, airplane tickets, and online shopping, no problems. Some people prefer to have a separate credit card just for online shopping, they feel it is more risky. I stick to major web sites for shopping; Amazon, and I have a PayPal account, two places I feel I can trust.
Renting a car you probably need a credit card in case you wreck the car. Your card would be charged the fix it amount; a debt card would only be good for how much you have in the account, which might not cover the bill.
Assuming the OP is in the US, we still haven’t got “chip and pin” on our credit cards. Like a few other things, we’re behind the rest of the developed world. :o
Plus, you have consumer protections with a credit card that you don’t with a debit card.
As to which card to switch to, perhaps a credit union card? And you don’t have to take the limit they give you. If it’s too high, ask them to set it at the amount you’re comfortable with, and tell them you do not want automatic line increases.
Soome credit cards also offer limited insurance for car rentals. My wife’s card is fancier than mine and covers a huge whack, when it comes to car insurance on rental cars. Mine covers a modest whack.
I keep one card with a paltry limit. They have occasionally raised that limit. I have called them and told them to lower it back down and that they are not to raise the limit without my express consent.
Well, in blunt terms weigh up the issues - spend a couple of hundred dollars on credit counseling to get at the root cause and eliminate it once and for all, or go tens of thousands of dollars in debt because the self-discipline isn’t there.
Unless there’s an annual fee, keep the account. If there is an annual fee, get one with a different bank or credit union, where there is no fee.
Average account age helps your credit rating. Something to do with lower average age means more credit applied-for recently. I’ve still got an account I opened in college, because it really jacks up my average account age, even though the account is more of an annoyance than anything else.
Your credit rating may not be an immediate issue, but if you’re looking to apply for a mortgage somewhere down the line, having a long, well-established credit history will help.
Then stash it in the freezer or someplace inconvenient, like another poster said. I’d recommend thawing it out and using it for a 20 dollar purchase once or twice a year to make sure it stays active. If you’re nervous about doing that, then make the purchase and IMMEDIATELY come home and pay it off online.
Congrats on being nearly CC-debt free - what a liberating feeling! We’re hoping to be there in a couple of months (every spare penny is being thrown to pay down some unusual expenses we had in the past year).
I saw on the TV show Becker the receptionist Linda was spending too much so she put her credit cards in a buck of water and froze them. That way if she wanted to use them she had to wait till they defrosted. No more impulse
Seriously I would get a secured card. What that means is your credit limit it matched to the amount you deposit with the bank. So if you get a secured card you open deposit $1,000 (for instance) and your credit line is $1,000. It shows up as an actual credit card (not a debit card with a logo on it), and you can’t really default, 'cause if you don’t pay the bank just takes the money you left on deposit.
This is good advice - an ‘old’ but occasionally active card is great for your credit rating.
Even if it has a fee, see if it can be decreased or use the card a couple of times a year to avoid the fee if it works that way.
I agree it is great to finally get them paid off - but sometimes knowing that you do that every month is a greater feeling. I like being someone who can pay off the card every month (even though I don’t use it a lot)
As others have said, the protection is better on a credit card than a debit card, even if it is a visa debit card. If somebody racks up your credit card, you just have a large balance until it gets cleared up. If somebody charges on your bank card, you have no money until it gets cleared up.
I would certainly use a credit card for some things over debit mostly due to the protections you have with credit. You have very little protection with a debit card. If someone gets the debit card number they could suck you dry quickly and the bank may not help or if they do you may not see your money back for months. The law does not require the same protections. For this reason alone it would be best to have at least one card that you pay off each month. This way you get the protection.
Also, remember cutting up the card does not cancel the card; only a call to the card company can do that. But canceling the card can effect your credit score. Of course if you had many cards canceling some of the extras may help your score too.
Maybe I’ll just have a Credit Card Cutting-Up Party. A symbolic gesture, but fun. (There could even be a Visa-shaped cake…) I ran one card up to the limit because of sheer dumbness, and I have learned my lesson. All of my other cards were paid off and canceled long ago. Would it honestly be better to keep this one annoying card because I’ve had it for so long? You’d think that they would be willing to lower the credit limit.
I have one VISA card, from a bank where I have no account. I asked them to keep my limit at $1000 years ago, and there it has stayed. I use this card for online shopping because of the protections and the fact that the limit is only $1000 - I don’t want anyone to steal $1000 from me, but I prefer that to $10,000.
So, yes, they will lower the credit limit if you ask them to.
Yes, it really would be a good idea to keep the account. The two most important already discussed, IMO, are because it’s good for your credit rating to keep a long-held account, and the consumer protections you don’t get with cash or debit. (IOW, make purchases like electronics on the card and then immediately pay off online. You’re not racking up debt, but if anything goes wrong with your purchase, the credit card company will duke it out for you.) Plus, you have it for those times when it’s required to present a credit card (ie - renting cars like you mentioned, when checking in to a hotel, etc.)
Cut it up so you can’t use it, but don’t close the account is the way I would go.
A symbolic gesture, but fun. (There could even be a Visa-shaped cake…) I ran one card up to the limit because of sheer dumbness, and I have learned my lesson. All of my other cards were paid off and canceled long ago. Would it honestly be better to keep this one annoying card because I’ve had it for so long? You’d think that they would be willing to lower the credit limit.