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Chase Suggests I close their credit card with outstanding balance - can this hurt my credit score?

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Chase Suggests I close their credit card with outstanding balance - can this hurt my credit score?

I have two credit cards with Chase that have a lot of outstanding debt on them.  I have been paying them off slowly with no overdue payments anywhere on my credit report.  Chase just recently sent me info saying that my minimum payment will go from 2% to 5% of the outstannding balance.  This means I will go from paying them $600 per month to over $1600.  I cannot afford this.  I called and discussed this with them.  On the account with the most outstanding debt, they suggested I close the account and agree to pay them $413 a month for 5 years at 2% interest.  This card is currently on a balance transfer deal which I pay  3.99% interest until paid in full.  I have been payiing it faithfully for two years with no late payments.  They say they will list on my credit report that the account was closed at my request.  Questions: 1)  should I trust they will list it as closed at my request, 2) will closing the account affect my credit score even if I continue to pay it off under this proposed agreement? and 3) why would they offer this instead of just leaving it open and charging me the current 3.99% but allow me to continue to pay 2% of the outstanding amount. I don't understand why they suggested dropping the interest rate when I didn't ask for that.  I was just calling them to say I couldn't afford to pay 5% each month and this is what they suggested.  Anything I should be wary of?

Thanks!  JimF 

Message 1 of 18
17 REPLIES
Frequent Contributor

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

There was a post out there that had a similar issue. The poster didn't close his account but then Chase closed them for him and stuck him with the higher minimum payments. So you may want to close it and take the lesser min. payment option.


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Message 2 of 18
Established Contributor

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

This seems like a no brainer to me. If you will not be able to afford the new minimum then your only option seems to be to close the account. I would take the offer and get the balance paid off as soon as possible. 

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Message 3 of 18
Established Member

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

I just went through this last week.  Citi gave me the option and only 15 days to cancel or keep.  If I kept the card my rate was going to be 29.4%.  For no reason.  Always paid bills on time, and I have a great fico score.  Long story short, myfico says if 'you' personally cancel it, no dent in your score.  If 'they' cancel it, it will hurt you.  I posted this on this board last week and everyone was up in the air about it.  Turns out a local tv station just had a small bit on the news about it, with someone from one of the credit bureaus, and he said it's better for consumer to cancel card.  He said there may not even be a dent in your fico score at all.  So I'm glad I cancelled it, cause there is now way I'd pay anyone that interest.  Make sure you do it asap and make sure it's done too. I'm now happy that card is gone.  Good luck.    
Message 4 of 18
Established Contributor

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor


dee wrote:
I just went through this last week.  Citi gave me the option and only 15 days to cancel or keep.  If I kept the card my rate was going to be 29.4%.  For no reason.  Always paid bills on time, and I have a great fico score.  Long story short, myfico says if 'you' personally cancel it, no dent in your score.  If 'they' cancel it, it will hurt you.  I posted this on this board last week and everyone was up in the air about it.  Turns out a local tv station just had a small bit on the news about it, with someone from one of the credit bureaus, and he said it's better for consumer to cancel card.  He said there may not even be a dent in your fico score at all.  So I'm glad I cancelled it, cause there is now way I'd pay anyone that interest.  Make sure you do it asap and make sure it's done too. I'm now happy that card is gone.  Good luck.    

The credit bureau interviewee didn't know what he/she was talking about.

 

Sounds like the 5-year set-term conversion would be a good deal for the OP. The 2% rate seems to be a standard deal Chase offers, as long as the customer's income and DTI are satisfactory.

 

Chase is primarily looking to get accounts off the open-ended terms of the for-life BT offer. If people paid only the original 2% minimum payment, and lowered their payment as the minimum decreased, the repayment would stretch to a bizarre number of years, depending on the APR. It's not very fair to force customers to unexpectedly make a choice; but for most who don't have other options, the 5-year alternative plan is preferable to being pushed over the edge by a 5% minimum that isn't affordable ...

Message Edited by Revike on 07-29-2009 04:10 PM
Message 5 of 18
Established Member

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

I not only heard this, but it's also been posted many times before. 
Message 6 of 18
Established Member

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

It is also on bankrate.com.  If i can find it, I will post it.
Message 7 of 18
Established Contributor

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

I would recommend to opt-out and pay the balance off at 2% for 5 years.
Message 8 of 18
Moderator Emerita

Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

Hi Dee!

 

I just want to offer a correction here. There is absolutely, positively, NO FICO score impact at all from the tradeline notations of "closed by credit Grantor" or "Closed by Consumer". Neither status has influence (none, zero, zippo) on your score. There is absolutely no ambiguousness (is that even a word, LOL?) on this issue. There's no documentation offered by Fair Isaac or myFICO that will tell you differently. You can find more information in this thread: Closing Credit Cards

 

FICO® scores are calculated based on your rating in five general categories:

 

  • Payment history - 35%
  • Amounts owed - 30%
  • Length of credit history - 15%
  • New credit - 10%
  • Types of credit used - 10%

  • dee wrote:
    I just went through this last week.  Citi gave me the option and only 15 days to cancel or keep.  If I kept the card my rate was going to be 29.4%.  For no reason.  Always paid bills on time, and I have a great fico score.  Long story short, myfico says if 'you' personally cancel it, no dent in your score.  If 'they' cancel it, it will hurt you.  I posted this on this board last week and everyone was up in the air about it.  Turns out a local tv station just had a small bit on the news about it, with someone from one of the credit bureaus, and he said it's better for consumer to cancel card.  He said there may not even be a dent in your fico score at all.  So I'm glad I cancelled it, cause there is now way I'd pay anyone that interest.  Make sure you do it asap and make sure it's done too. I'm now happy that card is gone.  Good luck.    

     

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    Message 9 of 18
    Established Member

    Re: Chase Suggests I close their credit card with outstanding balance - can this hurt my credit scor

    Yes, I agree.  That is what I have been saying all along!!!!!!!!  If you cancel your account on your own, there is no effect, but many people on here say there is. 
    Message 10 of 18