Ask Money

Getting organized

Chris Farrell Jun 8, 2010

Question: In looking at my finances I realized I have too many accounts. I have two employer 401ks I should roll over into my current employers’ and likely several credit cards I’ve forgotten about, like a Men’s Warehouse one from 10 years ago I got just for a discount. How can I safely close this account without dinging my Credit Score, especially since I want to buy a house soon? Shane, Kirkland, WA

Answer: I’m glad you’re cleaning up your finances. One of my favorite personal finance mantras is, keep it simple.

Now, I would go ahead and do the paperwork to get your other 401(k)s rolled over into your current plan. That’s the option you mention and in many cases it’s a good one if you’re pleased with your current 401(k) plan costs and investment choices. If you’re not, roll it over into an IRA.

By the way, there are no tax consequences or penalties imposed so long as the money is transferred from your previous plans directly into your existing plan (or into an IRA). But I would check both with the human resources folks in your former companies and at your current job to make sure you understand the paperwork process. It’s always helpful to have a human being talk you through their requirements.

As for the credit cards, I am a big fan of closing unused accounts even though it might ding your credit score for a short period of time. But you are in the market for a home. In that case, I would use the time to find any other credit cards you’ve forgotten about over the years. But don’t do anything until you’ve bought a home. You don’t want to run the risk of hurting your credit score right now. Get the best mortgage interest rate possible.

I would cancel any cards you don’t want or don’t use once you’ve closed on the home.

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