Comments on: Canceling A Credit Card

By: Liko

Liko — Mon, 03 Aug 2009 19:58:47 +0000

Dilbert, I live in Seattle where homes are still pretty expensive here. But I plan to move to eastern WA where homes are a third of the price. My job lets me work from anywhere.

By: dilbert69

dilbert69 — Mon, 03 Aug 2009 17:23:21 +0000

You should do what works for you. If not having credit cards helps you be more disciplined, that’s great. I don’t find that rewards progarms make me buy more, since I only get rewards on groceries, drugstore purchases, and gasoline, areas where my consumption is fairly fixed. I’m not going to buy 10 tubes of toothpaste when I only need 1 because I get a reward. BTW, where on earth can you buy a house for cash? Decent houses in good neighborhoods where I live cost $600,000 and up. One could also argue that even if you have the cash to buy a house, you should invest that cash elsewhere, as mortgage interest rates are low and there are lots of good buying opportunities in the stock market.

By: Liko

Liko — Mon, 03 Aug 2009 16:54:51 +0000

Dilbert, I’m glad you have the discipline to pay your cards off every month. I didn’t when I used cards. Cutting up the credit cards (9 cards) and closing the accounts was essential me (a former shopaholic). This forced me to live on my zero-based budget and not depend on credit cards. Over time this changed my behavior with money. Afer a few years of living on a strict budget I’m sure I can handle paying off a credit card in full each month now. But I couldn’t do that a few years ago. Cutting up the cards and closing the accounts helped me become disciplined about money.

I still have a good FICO score… upper 700′s… but over time (maybe 10 years) my FICO score will be uncomputable if I don’t borrow money and don’t have any accounts open. I don’t have or need a mortage (I plan to buy a house in cash in about a year), and I think reward points on cc are a joke! I also don’t like reward programs cause they encourage me to shop more instead of less.

Anyway, if you’ve never had trouble with credit cards and never paid any interest congrats to you, and I’m sure you’ll do fine in the future too. As for myself I’ll stick with the sure way and use cash and check cards (debit) only.

By: Honey

Honey — Mon, 03 Aug 2009 14:08:09 +0000

kitty, having cared for my quadriplegic, terminally ill mother in high school, I am well aware that many parents would like to take advantage of their kids’ love once the parents are old and sick. I think long term care insurance is way more ethical.

And since, bubbles aside, housing prices increase at exactly the rate of inflation, while housing prices may *look* more expensive by the time I retire, really they won’t be at all.

By: Andrew

Andrew — Mon, 03 Aug 2009 02:30:28 +0000

I thought the lowest credit score was 420 or 450. I agree with you that canceling all your cards probably wouldn’t lower it that low, but it would lower it to where you would have a hard time getting credit and would have to pay astronomical rates.

By: kitty

kitty — Mon, 03 Aug 2009 02:21:20 +0000

My bank just takes the full payment from my checking account every month. No chance to ever be late, no hustle; even if they take their time taking the money off my checking and do it after the due date they still don’t charge me interest because it was their choice. Don’t like them to take the money — use online payments; set up reminders if you don’t trust them to send you emails.

“Buying a home or having a kid is a WAY worse financial decision, IMO.”

And when you are old and sick there’ll be nobody to even give you a glass of water or make sure your health care choices are followed or just plain love you. I am childless by the way, not by choice. As I take care of my terminally ill mother, I can’t help thinking who’d do this for me.

As to not having a home — it can be a bad decision it can be a great decision depending on timing and whether or not you could afford the place you bought. People like me who bought or upgraded in the 90s are doing quite well. For example, I “upgraded”, rented out my old condo, sold it in 2000s and used the money to pay off mortgage on the new place. So now I own a townhouse and pay less every month than people who rent a studio. People who bought on the bubble lost money and yes, anybody with brains could tell it was a bubble. I sure could – I told a friend in 2006 not to buy anything and wait. My only mistake was not to see how it’ll affect the whole economy.

If you buy right than you may end up paying less every month after deductions (if you are allowed to deduct) than what you pay in rent. If not now than in 2 years or 3 years. Your rent will go up every year. If we get high inflation at some point, your decision not to buy a home will not seem so smart.

By: kitty

kitty — Mon, 03 Aug 2009 02:09:26 +0000

You always owe money to someone for one month: your electric company for example or your phone company. You borrow service e.g. phone use and then you pay for it at the end of the month. How is using a card and paying it off in full is any different? As to the being late for a day — since they invented automated payment of the full balance being on time all the time stopped being a problem.

By: kitty

kitty — Mon, 03 Aug 2009 02:06:34 +0000

This is not true. 1) your credit score is never 0 as the lowest is 300. 2) I don’t know for sure, but I believe that if you close all your cards, your score would suffer, but it still would be better than that of someone with score of 500. You’ll still have your mortgage and I read somewhere that even after it is paid off it is still included in the score for 10 more years or so. I wouldn’t bet on it, but I don’t believe your score will be as low as 500 just because you closed all cards.

By: dilbert69

dilbert69 — Fri, 31 Jul 2009 21:57:41 +0000

No one in their right mind would endorse planning their life around a FICO score, or worshiping same. Also, taking on debt for anything other than a mortgage, an education, or tools of your trade is probably very foolish. Fortunately, it’s not necessary to do so to build up a good FICO score. If you’re not disciplined about money, not using credit cards won’t help, as you’ll just spend as much as you earn anyway. Also, if you used to have credit cards, you still have a FICO score, it’ll just be a low one.

By: Liko

Liko — Fri, 31 Jul 2009 21:52:35 +0000

I’m not anti FICO, I’m just against worshiping and planning my life around FICO. If I have a FICO score, I’ll use it. But I use to do some STUPID things just to get my FICO score up. Like borrowing money for a car. For most people, maintaining a high FICO score means living a life of debt and interest. I know there are exceptions and people that are highly disciplined, but I’m not one of them, and according to statistics, neither is the average American. I know it’s hard to believe, but there is still life after FICO. I have a lot less stress and a lot more money than I ever did with credit cards.

By: dilbert69

dilbert69 — Fri, 31 Jul 2009 21:00:49 +0000

First, I wouldn’t want to tip my existing landlord that I’m planning to move until I’ve secured a new place, so that’s a problem. Sometimes I think the anti-FICO people on this forum are more concerned with being nonconformists than with their own best interest. If you want to be a nonconformist, get a tattoo. If you want to be financially successful, learn to manage money (including credit).

By: dilbert69

dilbert69 — Fri, 31 Jul 2009 20:19:25 +0000

I haven’t had that problem in 10 years since I started using online banking. My bank just adds up all the payments of all its customers who are paying that credit card on that day, transfers a boatload of money electronically into the credit card bank’s account, and provides an electronic list of everyone’s account number and how much they’re paying. The chances of it getting lost are essentially nil.

By: Liko

Liko — Fri, 31 Jul 2009 19:56:33 +0000

On more thing… Not relying on a FICO score can be a hassle… but it’s not as big of a hassle as dealing with creditors and credit card companies that claim they lost your payment.

By: Liko

Liko — Fri, 31 Jul 2009 19:52:24 +0000

You can still rent most apartments with a letter of recommendation from you last apt manager that states you paid on time. But you’re right; it’s kind of a hassle. I’m boycotting every business that requires their customers to have a FICO score. It just shows their management team does not have a brain to think for themselves. If they claim they’re too big to screen everybody, then they’re too big to provide quality customer care too.

By: dilbert69

dilbert69 — Fri, 31 Jul 2009 19:03:03 +0000

Without a FICO score, you might have trouble renting an apartment, particularly in a tight rental market. Also, plans change. Finally, a home cannot be bought, only made. A house or condo can be bought. Whether it’s a sound financial decision or not depends on the likelihood of the value rising significantly during the time you own it. Having a child is definitely a bad financial move, but there are other benefits (so they say; I too am childless and plan to remain that way).