If you’ve reached a point where you know you have too many cards and want to trim them to simplify your life or to get your finances under control, think carefully before you act. Some of your credit cards are better than others, so careful consideration is in order.
- Decide how many credit cards you really need. You may have applied for a card to earn a bonus or gift, but do you really need as many as you have? More than one or two shouldn’t be necessary. On the other hand, you don’t want to close too many accounts too quickly, since that could lower your capacity-the amount of credit you have compared with the amount you’ve actually borrowed. If you have a card you don’t need but don’t want to close the account, don’t carry the card with you.
- Pay off and close high-interest credit cards. Of course, the first thing to pay off is the high-interest cards. Take out all of your credit cards, and list them by name noting the balance, credit limit, interest rate, and fees. This will show you what your credit card situation is. Keep an eye on credit cards that have teaser rates coming due because they will go up soon too.
- Look for high fees. This can be tricky, but read the fine print. The cards you keep should be the best ones with the lowest fees. Though you don’t plan on being late, it does happen sometimes, so check out the late fees, too.
- Keep your credit union credit card. Because you do all your banking with the credit union, you’ll want to hold onto this card. Chances are, the rates are better and the fees are lower on this card anyway.