Dear Liz: Recently I’ve paid off almost $20,000 in credit card debt and am determined not to go down that path again. Because I haven’t used these cards in a while, though, I’m starting to get notifications from the credit card companies that they’re closing my accounts because of inactivity. I know having long-standing accounts on your credit report is a good thing, but I don’t want to be tempted to use these cards just to keep the account open. Is it a bad thing if almost all of my credit card accounts get closed?
Answer: Your good histories with these cards should remain on your credit reports for years. But if you stop using credit entirely, eventually your credit reports won’t generate credit scores. That could cause you problems if you later want to borrow money (say, to buy a home) and could even affect your insurance premiums, since insurers use credit information as well.
It’s not too hard to keep accounts active without slipping into debt again. Simply set up a bill to be charged automatically to each account, then set up automatic payments with the credit card issuer so the full balance is taken out of your checking account each month.
With respect to Social Security, survivor’s benefits could be a factor in delaying benefits. I understand, but am not certain, that my wife would be eligible to receive my full benefit after I die. If I wait to full retirement age to file, the amount that she would receive would be larger than if I file early. I believe that she could claim her benefit or mine, but not both. The information from the Social Security Administration is not entirely clear on this.
You’ve got it right, Bill, and it’s another compelling reason to delay starting your benefits if your checks are likely to be larger than your spouse’s.