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Remember to Cancel Finished 0% Financing Lines of Credit

This year I had new windows installed [3] (in part to take advantage of the energy tax credit [4] and because the windows were 20 years old) and I took advantage of a 0% financing offer from Castle Windows to fully finance the $7,000 purchase of nine windows and three sliding doors. Six months later, we paid off the $7,000 and smiled as it resulted in a nice 2.5% discount from the interest we earned by putting those funds away in a high yield savings account [5]. Then yesterday, as I was cleaning up some papers, I saw an old statement from GE Money Bank/Project Line, the lender that gave us the 0% financing money. On a whim I tried to log into my account to see if it was active and it was! I had erroneously assumed that the line of credit would be closed after I paid off the loan – aaaaannnnn (that’s a buzzer folks!), wrong!

So, my tip of the day today is to remember to close out those 0% financing offer accounts because there’s no sense having a line of credit open that you’ll never use. The credit score equation calculators will say that having more credit is good because it lowers your utilization and will improve your score, but I argue that having an account that’s “out of sight, out of mind” is dangerous because you won’t keep your eye on it. Let’s say someone gets access to it, since you aren’t checking that account you won’t find out about it until the first bill. That’s bad.

So, if you’ve opened up lines of credit like this, remember to close them out after you’ve used them because they won’t close themselves out automagically.