budget icon.thumbnail.jpg As I indicated in a previous post, I'm working on getting my budget in line with my reduced income. Step one was to cut up all my credit cards (I had three). Step Two was to start recording all my expenses as they happen – including cash outlay for meals eaten out, cigarettes, and miscellaneous. This has been a great eye-opener!

STEP THREE

Today, I sat down with my credit card statements and my telephone, and actually called the three credit card companies to CLOSE my accounts. The results surprised me.

The first creditor I called was Orchard Bank, where I carry the largest balance ($1200). They were definitely NOT happy about my decision to close the account. They told me that if the account were closed, they would charge me a $3.50 per month "Maintenance Fee" until the account was paid off. However, if I left the account open, they would reduce my interest rate by 9%, from 22.65% to 13.65%. Since I've already destroyed the card, thereby eliminating any temptation to use the account, I opted to keep it open at the lower interest rate until it's paid off. Then I'll close it. This saves me money by avoiding the monthly "Maintenance Fee", which they would have charged on top of the higher interest rate. Win-Win.

Next, I called the creditor with the second highest balance (Capital One at $835). Although I was hoping to get a similar deal, I was disappointed. Apparently, since my balance with them is (by their standards) "so small", they were not able to offer me a reduced interest rate. There was no monthly fee if the account was closed, and I was just billed the annual membership fee in March, which means the card will be paid up before that comes into play again. I went ahead and closed the account, despite the Customer Service Representative's best efforts to talk me out of it.

The third account was with Juniper Bank, and is a relatively new account with only a $174 balance. It's so new, in fact, that it still carries the 18-month introductory rate of 0% — no option of lowering that rate! It will be paid off within the next month anyway.

So, two accounts closed, one account with reduced interest until paid off and then it will be closed. A good day on the budgeting front.