Somewhat Z related...

kannibul

Closing the account and continuing to pay it off, doesn't hurt it...at least as I understand it. Plus it locks the interest rate. As far as maintaining a credit score, if the end result is that you want all your debts paid off, and pretty mcuh go to a cash-only method, then it doesn't matter.

That said, we closed both of our credit cards before I bought the Z, and was able to secure a 5.8% APR, without hitting a credit union. I was able to get 6.25% APR through my regular bank.

Lastly, there are two types of credit. Loan Credit, and Revolving Credit.

Revolving Credit is what credit card companies look at for a history of making payments on time for an open-ended loan. This is what affects your APR and credit limits most initially, well, that and your debt/income ratio.

Loan credit is for car financing, bank loans, and mortgages - anything with a set end-date. This is for determining APR or approval for a given loan, and what they'll loan you for, as well as your debt/income ratio.


Now, if I tried to open a credit card RIGHT NOW, I'd probably get a craptastic offer, but, since my intended goal is to NOT HAVE a credit card, I'm well on my way.

polarity

Thanks for all the information, my wife is always better about the spending than I am honestly. So this is something she will understand fully. I do agree that the idea would be to go cash and get away from credit, but for me I think keeping good credit will be mandatory even if my goal is to be credit free. I learned long ago that just because you don't have the money for something doesn't mean you won't need it. You always need to be able to deal with unexpected financial emergencies, if that's from savings that's great, but if not your credit needs to be good enough to get a loan with an interest rate that isn't going to throw your entire financial plan out the window.

Just a thought.

-William

kannibul

Following that thought, my desire is based on getting rid of credit cards, not nessicarily get away from using credit.

Loans are one thing. They cover mortgages, financing, and personal loans (secured and unsecured). These (typically) have a fixed term to them, where a regular payment is made X number of times. Unless you agree to something nutty, your terms won't change. Interest rates can be higher or in some cases lower than credit cards, and limits comparatively.

I have **great** credit in that area. I could walk into any bank and walk out $5K richer right now, and the bank wouldn't bat an eye.

What I'm getting rid of is revolving credit, ie, credit cards. They have no fixed terms to them. APR's are adjustable, at the discretion of the credit card company, a payment is due as a small percentage of your debt to the credit company, to where if you made only the payment they invoice you for...it'll take 30 years or more. The only advantage a credit card has over a bank loan is sometimes you can get a new credit card with a 0% APR for X months. As long as that balance is wiped out before the X Months are up, you're fine, if not, you get nailed for all the back interest. Also, they like to catch people on not making any payments over that intro-rate. Just because it's a 0% APR at the moment, does NOT mean that it's $0 payment over that time period - in fact, they can end that "promotion" because of non-payment during the 0% introductary rate. It's crap like that, that just has me saying that credit cards are pure ****.


The second goal is to get rid of any other debts as quickly as I can. It's money I'd be paying out over the long term, and by paying it off early, I'm skipping a lot of interest. Some people are fearful of paying off a debt early because you skip all the interest - sure, it hurts a TINY bit, but having an account paid/closed and done with - is much better.

Anyhow.

polarity

Ahh I'm following now, thankfully I only have the 1 card and I never use it. I do agree credit cards suck. That is actually what originally screwed my credit when I was 18. I mean, it was my fault but they didn't help. They sent me a card, YOUR APPROVED BLAH!, so like an idiot I went out and bought a tv with it (was like $120 or something then). I didn't read the fine print, apparently they had tacked on some fees that I didn't notice. Membership fee, annual fee, processing fee, I dont even know what other fee. Just lots of them. Which of course put the credit card over it's limit. So I got hit with a penalty. Then I paid the money for the TV (within the month) but still had all the other crap on it. I was 18 and stubborn and thought "Well, I'll show them. They can't make me pay it". And I didn't.

I went on about my life. 6 years later I start trying to use my credit and it's not happening. So I look and there it is, haunting me. Being a little wiser now I call them up. "Yes sir, no problem we can get rid of that for you, all you have to do is send us $3,000." I had the money, wanted to fix my credit so I sent it, as promised they actually removed it completely from my credit. But here I am years later now and can tell you for absolutely certain, that they will get their money or you will regret it. I have been a credit nazi ever since then, constantly checking it and watched it to go up/down.

-William