Paid off my credit cards: now what?

[Patrick Allen]

Hey everybody,

My question concerns what to do with paid off credit cards. I am within 24 hours, most likely, of consolidating some very high interest credit card debt I acquired several years ago for, of all things, guru investor training. I am gathering quotes for loans against my paid-off car to pay off the two cards once and for all, and will use the combined income of my job and rent payments to pay off the new loan within 12 months.

So, now that I have the two cards paid off, what do I do with them?

Do I:

- Cut them up, cancel the accounts and be happy I'm done with them?

- Negotiate some prize for staying with the respective organizations (lower interest rate, cash back options...?)

- Leave them in a secure location in case something catastrophic happens?

I like keeping a credit card in the saddle bag of my bicycle (I'm a competitive cyclist and once a year or so a situation comes up where you get stranded outside of cell service), but have no immediate use of a credit limit for a while. 

However, I like the idea of a recommendation for a credit card with attractive cash back or airline miles or something along those lines; being that I'll have a budget for repairs and cap ex, etc, it makes some sense to keep a credit card lying around. Not to mention a revolving credit line in case I get hit with a huge bill in the first year or so of owning my house.

What say the masses?

[JD Martin]

Don't do anything with them unless they have annual fees. Having available credit that is unused will help your overall credit score. You always want to aim for a high available credit/appropriated credit ratio. Someone with access to $20k and has used none of it is (usually) a better credit risk than someone with access to $40k and has used $20k of it. 

This assumes you have enough willpower to not use them. If you don't, then you should probably keep the accounts open but cut up the cards so you cannot use them without great effort.