One of my (3) credit cards sent me a notice that they will be increasing my APR from 12.99 to 21.99, eventhough the original rate was supposedly fixed. The reason they gave was that my other 2 cards have high balances. Fine, however, I just paid for a wedding and honeymoon, which is why they are high right now, but have been steadily paying everything on time and more than minimum, when I can. One of my other cards is at 10.9, and doesn't plan to increase on me. Why do credit card companies pick on good honest people like this? Why did my APR go from a fixed rate to a variable? They gave me the option refuse the increase by closing the acct. and just paying it off at the 12.99 rate. Would this look negative on my credit report if I do so?
2007-12-14 11:20:46 · 6 answers · asked by Anonymous in Business & Finance ➔ Credit
Sorry for the long explanation, but appreciate you reading and offering sound advice. Thanks!
2007-12-14 11:21:29 · update #1
Closing it in and of itself will not be a negative mark, but it will lower your total available credit, which in turn will raise your debt to credit ratio, which is negative. They raised the rates because, with higher balances, you are a higher risk of defaulting on the credit cards. The statement that you pay more than the minimum "when you can" indicates to me that they are probably right. If you can't always afford to pay more than the minimum, you've gotten in over your head.
Because they want to raise it almost twice what you're currently being charged, I'd say go ahead and close it if you have a high balance with them. If you have a small balance, something you can pay off within the next few months, keep it open but pay it off as quickly as possible. You sound like you're in too far already, so you really don't want to be getting any more credit right now anyway. Pay down those accounts as fast as you can and stop using them. The faster you get your balances down, the faster your credit will recover with the lower debt to credit and debt to income ratios
2007-12-14 13:17:29 · answer #1 · answered by Anonymous · 1⤊ 1⤋
Bad idea to close an account that still has a balance. They will probably increase your interest rate to the default rate and lower the limit to the balance. Since you are no longer considered a customer, you have no power to negotiate.
Instead, throw every penny you can squeeze out of your budget at that high interest card while making minimum payments on the rest. Get that card paid off completely. It won't make any difference what interest rate if you don't carry a balance on it.
A large part of you credit score is based on the ratio of revolving debt to available credit limit. If you close the account, you lower the available credit limit and this will hurt your credit score. You want to keep the debt to under 30% of you available limit.
2007-12-14 14:25:18 · answer #2 · answered by bdancer222 7 · 1⤊ 2⤋
undesirable thought to close an account that still has a stability. they're going to possibly develop your interest value to the default value and decrease the decrease to the stability. when you consider which you're no longer from now on seen a shopper, you haven't any longer any power to barter. fairly, throw each and every penny you could squeeze out of your funds at that best interest card mutually as making minimum money on the rest. Get that card paid off thoroughly. It won't make any distinction what interest value in case you do no longer carry a stability on it. a extensive portion of you credit is predicated on the ratio of revolving debt to accessible credit decrease. in case you close up the account, you decrease the accessible credit decrease and this might harm your credit. you prefer to maintain the debt to below 30% of you accessible decrease.
2016-11-27 00:39:49 · answer #3 · answered by blessing 4 · 0⤊ 0⤋
I wouldn't say its negative per se, however I've always heard that it looks better for the accounts to remain open, whatever that means. but if it's a case where a bank says they're about to raise the apr? then close it for you can keep the current rate you have. that's what I had to do with one of my cards, but I don't feel it impacted my credit in any way.
2007-12-14 13:04:02 · answer #4 · answered by mz_neemarie 4 · 0⤊ 1⤋
If you close that account yes. That big balance makes your score look bad as well pay it down under 30% . Your not doing too bad I've seen much worse on this site.
2007-12-14 15:58:51 · answer #5 · answered by Anonymous · 0⤊ 1⤋
hi, u qualify for a hamburger :)
2007-12-14 11:27:52 · answer #6 · answered by Anonymous · 0⤊ 4⤋