Put an end to evil late fees and overdue notices with our guide.

canceling a credit card negatively affects your credit score. a portion of your credit rating is based on your amount of credit available vs. the amount of debt. for example, if you have a credit line of $100,000 amongst 10 credit cards ($10,000 each), and you have $50,000 of credit card debt, your ratio is 2:1 (50%) credit to debt. if you pay off the debt in full of 3 credit cards ($30,000), you now have $100,000 credit, $20,000 debt. your ratio is now 5:1 (20%). your credit is improving. after paying off $30,000 of debt, if you then close all 3 credit cards, you no longer have that $30,000 credit line from those cards. your credit line is now $70,000 with $20,000 of debt. your ratio is now 3.5:1 (28.6% debt) instead of 5:1 (20%). And if you never paid off the $#30,000 debt and just closed the accounts, you would actually have $70,000 credit line and $50,000 debt. 1.4:1 (71.4% debt). your best pay is to pay credit cards down and then cut them up (you can even mail the cut pieces to the company so they know you wont be using your card. it tells them any new card usage is not you and should be pursued as identity theft), or put them away in a safe place for possible emergencies. but NEVER EVER CLOSE A CREDIT CARD ACCOUNT. i can't believe a CPA would give such advice. i'm a 22 year-old college student. and i don't even study finance, i study architecture. i learned this advice from watching Suze Orman on msnbc. maybe you old people should watch more television..

I worked at a nation-wide financial institution and learned many things about credit accounts and explaining debt management to people. Contrary to what Suze Orman says (I belive MSN.com recently ran an article which essentially said that her advice is not that great) it is ok to close out credit accounts. There are things that go along with saying that though. Lenders will look at your debt ratio, but that is only one of a few things they look at. Another large part of lending money is essentially knowing how much debt you can have- by that I mean they look at all of your available credit (which you haven't spent yet, but can) and determine how much money (or credit) they are willing to lend you. Also, you don't want to close multiple cards out all at one time or lenders may think you are in trouble and can't pay them. When you close out a credit line you need to also ask that the company update (or let the credit bureaus know) that your account is no longer active, not only that but asking the credit agencies (think equifax, transunion, etc.) to update their records which means that account that was closed will no longer show on your report. They are required to do this eventually, but unless you ask it could be a while before they remove the closed account.

look into Dave Ramsey. He is really a good person to look into about money management. I read his book right before we got married, a friend gave it to me. His philosophy is to help you get out of debt and stay out of debt by paying cash. He would also say that a credit score only means that you have debt and does not matter. It's better to not have one, than to have a 'good' one. Check him out. I have canceled all my credit cards, and we only have 1 that we use and pay off every month (it was his). Pay cash for whatever you can, part of the smartest advise ever. But definately check out Dave Ramsey. He made a lot of sense to me.

I use mint.com- as a planning/budgeting tool. This website is FREE- and so easy to use. I used it before I got married and now I've added my husbands accounts so we can start to organize and plan our new budget together. I highly recommend it!