I can’t handle all these accounts!
We have too many accounts, and I can’t handle the overwhelming feeling of clutter and confusion, even though they’re just sitting there minding their own business.
We have:
- 2 Checking Accounts (Bank of America is primary)
- 5 Savings Accounts (BoA, ING, HSBC, Citibank, and Emigrant Direct)
- 8 Credit Cards
And I know people with literally dozens of bank accounts and credit cards (i.e. another PF blogger). This particular blogger just received his 22nd credit card! However, he’s very responsible with them, but it’s just clutter! It’s 15 more things I have to keep track of in Quicken, online and physically (credit cards, account statements, tax information) than I need.
How can we get out of this mess?
Some gurus would just tell me “Mike, you need more cards because rewards change” and “Mike, you need more savings accounts because interest rates change”. I say IT HAS TO STOP!
Here’s my plan:
- Close BoA savings account. We have a few hundred dollars earning almost squat in interest. BoA has horrible savings rates, so that’s gone. We only kept it because we thought having a direct link to our checking would make things better in case of emergency. Well, in case of emergency, we will use a credit card and pay off the balance that month (and earn some rewards in the process).
- Close Citibank savings account. You may ask why. I ask “why not?”. I opened Citibank to get the extra $50. Well, they just paid out, so it’s time to close. I don’t want my money all over the place. They do have some local branches near my home and work, but I don’t touch savings unless I absolutely need it.
- Consider closing Emigrant Direct account. It’s still earning 5.05%, as is my HSBC account. But why have 2 of the same type of account?
- Consider closing GM card. I have about $650 earned on my GM Card that can be used to buy a new GM vehicle. I never use the card anymore, but I really don’t want to give up that much in rewards. I just don’t know if I’ll be buying any GM vehicle in the next few years before they would expire.
- Consider closing Discover Miles card. We don’t fly much. I don’t need the miles. I already have a Discover Platinum card. I just may need the balance transfer option if I don’t pay off our $10,000 in credit card debt (which is currently at 0%) before November.
- Consider closing BoA Visa card. As with the Discover card, I may need this card for any promotional balance transfer rates if I don’t pay off my CC debt by November. Also, it’s one of my older cards (not sure how old right now). But I never use this card for purchases, and it’s not a rewards card (as far as I know).
- Consider closing wife’s AT&T Universal Card. She never uses the card, unless she wants to buy me a birthday or Christmas gift without me seeing the receipt (not hiding the cost, just trying to make it a surprise). However, she could easily use cash as well (unless she’s buying online). I’d have to see how it might impact her credit score, since it’s the only open credit card on her record.
So, there’s half of our accounts that I could close without losing out on a whole lot. Any reason why we should keep any, or all, of them open?
Family Savings says
Just my two cents. You should close all the credit cards and savings accounts except for one each. Who cares if things change here and there by a little bit. Go with the two that have the best service and who keep their rewards and interests up-to-date and in competion with others.
J2R says
I have 2 savings accounts, 2 checkings and a couple of credit cards.
I like having 2 savings, because rates vary. One day Citibank is offering 5%. The next month, it’s down to 4.5%.
Same with ING and other banks. Their rates are not fixed forever. If you believe HSBC will ALWAYS have a higher interest rate, then go for it and close it.
I’m my own twisted mind, I consider this sort of diversifying my investments. Plus, I HATE opening accounts, moving money and closing accounts.
On credit cards, I’m with you. I’m still analyzing the benefits on each card to see if they’re worth keeping.
Some give points, others give cash back, others contribute to my kid’s 529 plan. And it’s hard to figure out which one returns more bang for your buck.
The Happy Rock says
Clever,
I think it is a great idea! I went through some finance system changes a while back.
If you haven’t seen the pieces, they might be of some help.
Clever Dude says
HappyRock, I am also considering getting an ING Electric Orange account, but I’m still undecided whether it would be more hassle than what it’s worth (i.e. CLUTTER) since I would need to keep a brick-and-mortar checking account too.
The Happy Rock says
The interest isn’t a ton of money, so not doing electric orange is unimportant compared to how the system motivates you and makes you feel.
Tyler says
Why people have more than 1 savings account is beyond me (unless that figure is above 100k). In any case, it’s good that you realize you have too many accounts. For my wife and I, the less we have, the simpler our lives and less stress overall. We have 1 checking account, 1 savings account, and 1 credit card. Ah yes, I can take deep breaths and not worry where my money is and how much is in there! No clutter, no crying…
plonkee says
Don’t close your wife’s credit card account. She needs a good credit record as much as you do, and she could easily need access to her own credit.
Close all the other credit cards (assuming that you still have one open) and focus on getting rid of the credit card debt. Clutter is bad for the mind.
anonymous says
Your situation is exactly why I disagree with pursuing these one-time $50 offers for opening accounts.
I also eschew reward cards that don’t offer cash back for the same reason. The money you have on your GM card, which may or may not be useful someday, would be cash-back if it were on a different card. And it would be a real shame if you ever felt pressured to buy a car you didn’t otherwise want simply because you are trying to use rebate dollars.
There’s a term used in engineering: “KISS”, for “Keep It Simple Stupid” (the easily offended can replaced “Stupid” with “Silly”, “Sweetie”, or some other euphemism for “Stupid”). Complexity is the hobgoblin of success. No matter how smart we are, or think we are, when faced with complexity we will make poor decisions.
Lulu says
I would go ahead and close the extra checking and savings accounts if you really do not like dealing with them. The only thing I can think of for keeping the credit cards open is that closing them will bring down your credit score. If you are planning something that needs a high score then you should leave the cards open even if they have a zero balance. But if you don’t need a sexy credit score right now…then go ahead and get rid of the clutter.
Punny Money says
Unless you’re stuck paying some sort of annual fee or performing some other sacrifice for the sake of maintaining a credit card, never ever ever ever ever close credit card accounts.
A big portion of your credit score is based on utilization. The more of your available credit you’re using, the more it negatively impacts your credit score. If you start closing credit accounts, your total credit line starts dropping, and your utilization (even if you pay off your balance every month) can rise pretty dramatically. Even a small utilization increase can push you into another credit score bracket, and that could mean significantly higher interest rates on auto and home loans in the future.
Another reason never to close credit accounts: some credit card companies also marked closed accounts as closed by the credit card company as opposed to closed by you, even if you made the request. This can have a serious detrimental effect on your credit as it suggests you did something bad to earn the account closure.
I’m up to 24 cards now. The vast majority were “one time use”–i.e., sign up, make a single purchase, receive the $50-$250 bonus, and never use the card again… or sign up, do 0% balance transfer, pay the card off each month, pay the full balance at the end of the 0% period, never use the card again. I don’t close the accounts because each one adds to my credit line size… plus I check them periodically for new 0% balance transfer offers. In the meantime, I either shred the unused cards (I can get a replacement later) and keep the information in an encrypted data file, or I store them in a safe place.
If there’s no balance and activity on the card, you can just shove it in a drawer and leave it there for all eternity. Make sure the online accounts have your current e-mail address in case there’s ever any unexpected activity on them.
The interest isn’t a ton of money, so not doing electric orange is unimportant compared to how the system motivates you and makes you feel.
It’s 4.00%! That’s versus almost 0% in any other bank’s checking account. That’s $400 thrown away on a $10,000 checking account balance. Throwing away $400 would make me feel really dumb.
Clever Dude says
Plonkee, I’m definitely thinking along the same lines regarding my wife’s credit history.
Nick (er Punny), I didn’t mention that the cards I’m looking at dropping at low limit cards (like 1k-3k) while the cards I’m keeping are 20k-25k limits. I understand the whole utilization thing, but I don’t plan any major purchases in the next year, or two, so I’m not worried about building my score back up before then. I’d rather sign up for good reward cards (together with my wife so she earns the benefit) than keep nonperforming cards.
Rob says
WHOA, WHOA, WHOA,…
Before you close those credit cards, I highly suggest you look into how that will affect your credit score. I was given the impression (from several highly reputable people) that closing credit cards is a big mistake unless your getting charged by them. Apparently when you close a credit card, all of your credit history from that card disappears and your credit score may drop. I heard that it’s better to cut the cards up than to ever close the account.
Check out this link… they have the whole story here:
http://articles.moneycentral.msn.com/Banking/YourCreditRating/4creditScoringMyths.aspx
MFJ says
Agree with Punny and Rob – go ahead and stop using those other accounts on a daily basis – but keep them open to help your credit score.
Sick of Debt says
What’s everyone’s concern with the changes in your credit score? I’ve heard it both ways “Keeping several cards open with $0 balance lowers your credit score since your at a higher risk of going into debt.” and “Closing your cards with $0 balance lowers your score…”
If you really want to get out of debt, focus on that, not your ability to get into more debt. That’s what a credit score is all about, your ability to get into debt. I’m a little biased though, sick of debt and all.
Clever Dude says
Rob, the article you linked explains that closing accounts MAY affect your credit score.
I have about $75,000 in credit limits. The cards I would drop (not counting my wife’s) would kill about $9,000.
Right now I’m utilizing 13% of my limit. That would rise to 15%. And in meantime, I will probably look into adding a better rewards card (not mentioned in my article), which would add back some of that lost limit.
Also, the article mentioned that closing older accounts would cause problems. I’m keeping my 2 oldest accounts (from college). The others were opened after 2001.
Sick of Debt – You’re right. I don’t see what the big deal is. What, my score will drop 20 points at once? I have quite enough time to build that back up, and I know my score is well over 700 anyway (don’t know the exact number). I’d rather just not spend money than have to figure out which of my 8 cards is best for this or that purchase.
Rob says
Hey,.. that’s fine. You know your Credit Cards & Credit score better than I do. I just wanted to make sure you were aware of the possible repercussions. From what you explained, I’d agree,.. you’re probably in the clear.
Tim says
I’d read the fine print on the Citi $50 promo first, before you close it. Most require you to maintain the account for 6 months, otherwise, you will pay an early closure fee.
credit cards: if it is a one year old, it’s not going to be negative, so long as you aren’t expecting to get a loan within 6-12 months. if you have a few from the same company (i.e. citi), you might ask citi to consolidate the credit limits onto one card and get rid of the other ones.
BofA Visa: since it is one of your oldest, then keep it. Also, if you are a BofA credit card owner, you can open a MyAccess account and get a $100 promo.
if you have savings accounts doing the same thing, then get rid of the rest and keep one. if you have savings that have lower interest rate than another, then get rid of them.
change rewards programs within the same credit card family. if you don’t use miles, then change the reward program to something you use.
i wouldn’t get rid of your wife’s credit card since it is her only one.
Tyler says
You guys are seriously being played by the credit card companies and other lenders! WHEN WILL ANYONE REALIZE YOU DO NOT NEED A CREDIT SCORE FOR ANYTHING!!! If you want a car, SAVE UP FOR IT! If you want a house, go to a mortgage company that MANUALLY UNDERWRITES the loan! You’ll probably get a much better rate anyway because credit scores fluctuate so much and it is not the best measure for payment risk anyway! You guys that have over 2 credit cards are seriously delusional and blinded. Fico-this! Fico-that! Screw the credit score! If you really want to live debt free and free from lenders again, you must adopt this mentality. Obviously, being a responsible citizen and consumer, you should make sure you pay back everything on time so that it doesn’t look bad, but to do it just for credit score is mad.
Rob says
Funny,.. every place I ever tried to rent from checked my credit score. Heck, even my cell phone carrier checked my credit score before signing me on. I mean, there may be alternatives, but not caring about a credit score can severely limit your options. I’m not saying that you need to jump through hoops,.. just be responsible.
Baz L says
I would trade one of the checking acocunts for an ING Account. ING Accounts are sexxxy, plain and simple. You get a checking account with excellent Bill Pay and one that earns 4.00% interest. You, always, and will always need to maintain one checking account from which you can actually write a check (one day you’ll need it). I haven’t for a while though.
Pay off the credit cards accounts and cut them up and forget about them. You can call up the credit card company and tell them put a hold on the account so that no charges can be made.
However, your lil’ calculation shows that it won’t hurt you that much. People like me with $10,000 total credit limit spread over 3 cards don’t dear dream of closing any of them.
BoA savings??? Why??? You just need one, maybe two (if you have the ING account). As one of the guys said up there (can’t remember who) these online savings account bank always battle it out, so rates will vary. Also, there’s the whole “all eggs in one basket thing”, so that’s the only reason I have two.
You might always consider signing up and registering your account at www.yodlee.com. It stores all your account information and you can update with one click and it does everything. Gives you a nice overview.
Simplicity has its place, but there’s something ot be said for flexibility. Always have a backup, crap happens at the funniest times.
Tim says
the problem with cutting up and “forgetting” about them ensures that you may have problems in the future. if you own any account, you need to periodically maintain and look at them. if not, rules change, and suddenly you can be liable for new fees if you “forget” about the accounts, you may have put yourself in an unintended mess.
Tyler, it is situationally dependent. as Rob wrote, if you rent, you are more than likely going to get a credit pull. if you moved and need to start up utilities, get a phone et, you may get a credit pull in these cases, it is the difference between paying a deposit and not. there are many jobs that require a credit pull. if you go through your entire life without having credit, and then suddenly need it, you are going to be in some pain. being a responsible person doesn’t mean you shouldn’t get credit cards or loans. i agree fico shouldn’t be the end all, but if you are responsible and looking to get the best rate on loans, you must. again, it all depends.
having too many checking and savings accounts can lead be overwhelming and be a challenge. if you aren’t using them, then consolidate. no sense in having them unless you are getting some kind of bonus out of them. credit cards, i think if they are under a year old, getting rid of them or consolidating within the same family of credit cards is fine…that is if you aren’t expecting to get a loan within 6-12 months. much of all this stuff is to ensure you are going to get the best rate if you want to get a loan or credit.
Ms Broke says
If it makes you feel better, I think I have about… 14 superannuation (retirement) accounts 🙁 And that’s just stupid! (I’m going to consolidate soon, I swear).
MoneyNing says
Ms Broke: Don’t wait. Consolidate them as soon as possible. You are almost throwing money away the more you wait.