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emma
Posts: 9
Registered: ‎08-12-2007

How closing Cap One CC due to rate jack will affect credit score?

I received a letter from Cap One sometime late last year letting me know they were going to increase my interest rate from 7.95% to 17.9% beginning January 2010 due to the economy. Having been a *perfect* customer since 1998 (in my eyes--not their's I guess, because they don't make any money off of me) by paying off balances within 30-60 days, having a refi car loan from cap one in the past, etc., I wasn't happy to say the least. I was using the card exclusively, because it had the lowest interest rate between my 2 CC (other one is Providian/now Chase, with 13.24% interest. Chase hasn't increased my interest rate the whole time I've had the card, also since '97-98). I have only charged about $15 to Cap One since December, since they are no longer my card of choice, and I've considering closing the account. Total credit avail on CO is $7500, chase is $12k. My credit is excellent now, and I don't want to ding it by closing  Cap One. Should I keep COne open, using it sparingly to avoid closure/fee for non-use? And, keeping my available total credit open in case of emergency, or should I close it on principle? I have auto loan, mortgage, Kohls, and these 2 CCs.
TU 786 2/27/10
EQ 795 2/27/10
Bankruptcy 1997 - Have faith, time and strict credit habits and you'll heal (almost) all wounds.
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MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: How closing Cap One CC due to rate jack will affect credit score?


emma wrote:
I received a letter from Cap One sometime late last year letting me know they were going to increase my interest rate from 7.95% to 17.9% beginning January 2010 due to the economy. Having been a *perfect* customer since 1998 (in my eyes--not their's I guess, because they don't make any money off of me) by paying off balances within 30-60 days, having a refi car loan from cap one in the past, etc., I wasn't happy to say the least. I was using the card exclusively, because it had the lowest interest rate between my 2 CC (other one is Providian/now Chase, with 13.24% interest. Chase hasn't increased my interest rate the whole time I've had the card, also since '97-98). I have only charged about $15 to Cap One since December, since they are no longer my card of choice, and I've considering closing the account. Total credit avail on CO is $7500, chase is $12k. My credit is excellent now, and I don't want to ding it by closing  Cap One. Should I keep COne open, using it sparingly to avoid closure/fee for non-use? And, keeping my available total credit open in case of emergency, or should I close it on principle? I have auto loan, mortgage, Kohls, and these 2 CCs.

Hi Emma,

 

I see no reason to close this card. I've had all my rates increased over the last 2 years or so but I decided to play their game and not give them anymore interest. It doesn't matter what your rate is as long as you don't carry any balances forward and PIF each month. They can charge 100% interest but 100% of zero is still zero.

 

IMO.

 

 

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Valued Contributor
Jazzzy
Posts: 2,678
Registered: ‎07-29-2009

Re: How closing Cap One CC due to rate jack will affect credit score?

Hi emma...I agree with marinevietvet. If this card doesn't have an annual fee, why not keep it? Charge something small on it every couple of months and pay it off right away. Or, what I've done with the cards I no longer use is to put a small monthly fee on them (Netflix, book club, etc.). That way the card shows activity each month, and I don't have to mess with it.

 

Closing it on principle does nothing. They won't care.

New Member
emma
Posts: 9
Registered: ‎08-12-2007

Re: How closing Cap One CC due to rate jack will affect credit score?

Hi - thanks, that's my plan, as you say 100% of zero is zero. Update: I just called Cap One out of curiosity to see what they could do for me right now. Their answer is there's nothing they can do at this time but enroll me in a cash rewards program, to which I said no. It just makes me a little p**d that good people who have tried to be good consumers get jacked. I did ask if there was any penalty for non-use or low-use, and there isn't, I just have an annual fee of $59 for the privilege of their credit, so I guess I should be happy that I HAVE credit, eh?
TU 786 2/27/10
EQ 795 2/27/10
Bankruptcy 1997 - Have faith, time and strict credit habits and you'll heal (almost) all wounds.
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charliebrown1370
Posts: 313
Registered: ‎06-26-2009

Re: How closing Cap One CC due to rate jack will affect credit score?

Hi Emma,

 

There is a sticky at the top of this board titled "Closing Credit Cards". Lots of good insight.

 

If you close this card you still get to keep the positive history (for up to 10 years) which also contributes to your AAoA. What you will loose is the available credit which will impact your utilization.  You didn't mention if the card has an AF. If not, IMHO you might want to SD the card and run a recurring monthly payment (such as a cell phone bill) through it to keep it active.

 

cb


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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: How closing Cap One CC due to rate jack will affect credit score?

[ Edited ]
I've closed a few cards because they annoyed me, but only because after a lot of investigation, I could tell that the measly CL's would never grow. Considering closing a card on principle is understandable, but doesn't really make sense for your personal credit and finances, which are all that matter. It certainly won't make any impact on the CCC.

Pretty much all lenders jacked their rates over the last year and a half or so, during the financial meltdown, and then there was a second wave prior to the effective date of the Credit CARD Act. I think it's a combination of their wanting to shake the money tree, in hopes of getting a few more bucks out of consumers, and covering themselves against the tighter regulatory environment that has now commenced.

We've had members with nose-bleed-high FICO scores, impeccable credit reports, and long history with a lender who were jacked. If there ever used to be any sense of loyalty by the big banks toward good consumer customers, it's gone now. We're just flyspecks on their windshield. Their real money comes from commercial customers. We'll see how well they do when the imminent commercial real estate loan disaster explodes.


eta: sorry, I just now saw that there's an annual fee involved. That can make a difference, depending on what your other current credit options are. If you have several other CC's with healthy CL's and no fees, that might make closing this one a little more sensible. Even so, if I were in your position, I think I'd plan to keep it for one more year (annual fee cycle) anyway. There's just no telling what lenders are going to get up to this coming year, and I like keeping my options open. :smileywink:
Message Edited by haulingthescoreup on 02-27-2010 07:53 AM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: How closing Cap One CC due to rate jack will affect credit score?


emma wrote:
Hi - thanks, that's my plan, as you say 100% of zero is zero. Update: I just called Cap One out of curiosity to see what they could do for me right now. Their answer is there's nothing they can do at this time but enroll me in a cash rewards program, to which I said no. It just makes me a little p**d that good people who have tried to be good consumers get jacked. I did ask if there was any penalty for non-use or low-use, and there isn't, I just have an annual fee of $59 for the privilege of their credit, so I guess I should be happy that I HAVE credit, eh?

I have a Cap 1 with an AF of $20. It's my oldest card at 12 years so I'm not going to close it over $1.66 a month. If it was $59? I don't know. I would probably still keep it because it is my oldest. Only you can decide about yours.

Regular Contributor
Wesley23
Posts: 122
Registered: ‎06-02-2008

Re: How closing Cap One CC due to rate jack will affect credit score?

A few years ago, I had the same issue. I started out with a capital one card, but I really got tired of how they treated me when I called. After getting a few prime cards, I dumped them at the one year mark. Last time I checked, my equifax score was somewhere around 730-40, so I don't think it has affected my credit score all that much.

 

I'd recommend pulling the plug on capital one as long as you have a few decent prime cards. My experience with them was terrible. I wouldn't recommend anyone do business with that company. And since you're paying an annual fee, that's even more reason to dump them.

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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: How closing Cap One CC due to rate jack will affect credit score?

Don't forget that there are higher-CL Cap One cards, not just the rebuilders. :smileywink:

OP seems to have one, as her CL is $7.5K. Nevertheless, it's frustrating when they stonewall requests from good customers.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
New Member
emma
Posts: 9
Registered: ‎08-12-2007

Re: How closing Cap One CC due to rate jack will affect credit score?

Thanks to you all! I have to say, this is the absolutely best forum in my experience -- never fails to give me good, solid, pragmatic advice!
TU 786 2/27/10
EQ 795 2/27/10
Bankruptcy 1997 - Have faith, time and strict credit habits and you'll heal (almost) all wounds.

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