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I'll try to make this short-We have an LL Bean credit card issued thru Barclays Bank-Delaware. We hardly ever use it and it has no balance. We only use it because it includes free shipping of LL Bean items and free monogramming. well- last Christmas dh sent his parents a wreath from LL Bean-somehow- by the time the bill came in January- it already included a late fee for the stupid wreath- more than the wreath itself! Anyway - he paid the bill and late fee thinking he must have missed the previous bill- or maybe threw it out thinking it was junk mail because all our cards we use regularly are paid in full automatically on-line. so today I got this letter saying we "triggered the penalty APR"and they were raising the rates-due to our "recent late payment and a decline in our creditworthiness.......". I really don't give a s@!t because we usually pay in full and increased rates don't really mean anything in our case- but should we go ahead and just close the account under these circumstances- or will that somehow further adversely affect our credit rating- ? I hate to go thru this aggravation- because of a Christmas wreath!
Thank you for reading this and any advice you may have.
Yes, closing a card following a rate increase may affect your credit score. I guess it's much better if you could go for a balance-transfer instead. This way your credit score will remain unaffected and the account will stand "paid off" and open for you.
I guess it's much better if you could go for a balance-transfer instead.
??? How can you "balance-transfer" when the bill is paid in full?
There's nothing to transfer!
IF there is no annual fee,
and IF you have had it a awhile....
I'd keep it open. They raised the rate, but who cares about interest rates when you pay in full anyways....
Otherwise, I'd close it and take the temporary hit of closing a card.
closing that account will have little to no effect on your credit score...
the only way credit cards have a major influence on your credit score is if they are all maxed out or close to being maxed out, or you have delinquent payment (>30days late), or if you have credit balances that have been charged off.
My understanding is that any credit card account inactive, with zero balance but still open, will createa little negative score if closed and it is better to leave it open, just do not use it again.
"The most important point made by spokesman Craig Watts is that it's a myth that if you close a credit-card account, all trace of it disappears from your credit score. In fact, he says, the credit agencies from which FICO draws information used to calculate your score hold on to payment history for years — the positive stuff for about a decade and the negative stuff usually for seven years. That information is used to calculate two parts of your credit score.
One is payment history, which accounts for 35% of your score and which reflects, among other things, whether you made your payments on time and whether you welshed on any balance you may have owed when you chopped up your card. Another is length of credit history, accounting for 15% of your score, which reflects whether you're a newcomer to paying people back or not. All that stays, Watts says, if your card goes.
You've read — perhaps from well-meaning people on FICO's own message boards — that you should never close your oldest credit card because your length-of-credit-history measurement will immediately plummet? Again, that's a myth, says Watts. (Dropping it might affect your credit score a decade from now, he grants, but the impact will be small potatoes compared to that of your credit-related behavior in the interim.)"
Yep;it will have a pretty small effect and not for long. But when aplying for credit the rules are changing. Its not only crdit score but income to debt tht is effecting so mnay now days. The easy credit days and documentation requirements such as income to debtand other factors such as lower limits total are comin it to play.
Save yourself the hassle of the lengthy phone call, send them a letter. It is well worth the cost of a stamp not to hear the 'retention specialists' blather on why you should stay. Dump the card and move on, or to state that in bank terms "due to your recent increase in rates, you have triggered my deletion of your firm from my preferred financial institutions".
And quite frankly who cares how it effects your FICO.
just as an aside- after dh sent in the check for the payment (and waited till it cleared the bank) he went ahead and put this card on auto on-line payment- wouldn't you know it- they debited the amount again from auto-payment- I think this Christmas wreath has cost us over $150.00 do far!
Yes, if you don't use the card get it closed and don't let stupid FICO hold a gun to your head to make you keep it!!
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