I had 2 instances last week of paying the stupid tax. One was kinda/sorta my fault, the other is completely on me.
The first, more benign of the 2 was actually much more expensive. A year or so ago I took a course at an online university, paying my tuition with a credit card. However, the charges never appeared on said credit card, although I was assured last time I spoke to them (sometime in August 2015) that it was in the system and being processed. I thought no more about it, and frankly we run so many of our expenses through our credit cards I simply forgot all about it. I was also still with my former full-time firm, and they typically reimbursed me for CPE type credits, so I figured I must have put it on my company credit card. Either way, there was no communication from the school until last month, when I received a very nice letter from the attorney/collection service they use for old debts and then a follow-up phone call early in the month.
I called her back last Friday, determined that the debt was real and in fact mine. I explained the situation and circumstances as I recalled them, and she very kindly waived the late fees and interest, leaving only the original tuition amount that I actually owed. I gave her my credit card number (same one I believe I originally tried to pay for these courses with), and waited until she ran it and received confirmation from the company that it was paid. I jotted the confirmation number and all is well in that corner of my world once more.
The second one is an annual fee for a credit card I never use and have not given a thought to in 3 or 4 years. Because I signed up for online banking back when we originally banked with the issuing bank (for all of about 2 months, when they screwed up direct deposits twice in 2 months), there was no fee for this credit card. Now, because I no longer bank with them, because I never use the credit account, or just because they can, there is a $20 fee, which they billed electronically and the email notifying me of the statement went into my spam folder. A month passes, no payment, and I am dinged with $2.23 in interest charges, and this time I do actually see the email that I have a past due amount.
This one is completely my fault and I own it. I called, paid my debt, and asked them to cancel the card. No, I don’t care that I am good for another year; I have zero plans to use that card and have no desire to be having this same conversation about a late payment again next year. Cancel the card, close the account; I’ll wait.
The process got me thinking about the stack of credit cards in our gun safe. All these credit cards are from various periods in our lives or opened for rewards, etc. None of them have balances or annual fees, and if the physical cards are in the safe, they are not active and could/should be closed.
I waver and waffle on this topic. Between M and I we have 4 cards we use for varioius purposes. One card is for our regularly occurring bills on autopay – utilities, cell phones, storage rent, pest control, etc. Another is for online shopping. Then M and I each have our own cards we use for our purchases while out and about; makes it simpler to sort out receipts and categorize our spending. I have a separate business card for business-related expenses, and we also have branded cards for Costco and Sam’s Club.
All our credit cards are paid in full when statements are issued.
That leaves us with another 26 open credit cards and combined credit limits into 6 figures. Excessive much? Time to do some housekeeping.
I do not plan to close them all at once. While we have no immediate plans for big-ticket purchases that require financing, I recognize the need to simplify and decrease our credit exposure and let our scores recover if they take a bit of hit over the course of this process. My current plan is to close 2 or 3 per month. Some are in M’s name, some are in my name.
By the end of this process, we will have a few special-purpose VISA cards, a MasterCard, an American Express and a Discover card. I like some variety, and each offers unique rewards and no annual fees. M and both have our primary cards and will use our Costco VISA when it is issued next month for our backup cards. The rest will probably reside in the safe, except for once a twice per year we use them for holiday shopping (extra department store rewards) or travel.
But man, I wonder how I just ignored this for all this time. When I had more regular gigs as a budget coach, I used to counsel my clients to pay off their debts and then close the accounts. We did that as we got out of debt, for years using just one card and paying it in full as we paid off the rest of our debt. I have no idea when we turned this corner of playing the credit card rewards game and not closing accounts after collecting or utilizing our bonuses.
No more, though. Going forward I’ll try to close an account if we should open a new one, or close the new one within a couple of months of collecting the sign-up bonuses. I think the new system I have in place should keep us on a cleaner credit path going forward.
Or so I hope, anyway.