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Posts: 1
Registered: ‎05-22-2009
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Please Advise

Like so many others we've been hit by the recent APR rate hikes on our credit cards.  As a result of a family crisis, we have very high credit card debt.  On our Citi card we currently have a 5.75% rate, with proposed increase to 15% (we have a $19,000 balance with 25 CL).  We opted out because of our very high balance.  This means we will keep our current terms but account will close when CC expires 3/10.  We can change mind and "opt back in" should we choose, anytime before then.  Yesterday received notice from Capital One that rate is going from 6% to 18% effective 2/10.  We have a 15,000 limit with 14,000 balance (not good, I know).  We have another card with a 10,000 limit, no balance.  My question is this.....still have a high FICO scores despite all this debt and am concerned about the utilization of debt to avail. credit killing our scores.  We will be paying off the 14,000 balance and keeping the account open and not used.  However, the 25,000 card will be closed if we opt out of the terms showing a 19,000 balance.  How much will this impact my score?  Is it worth it to secure such a lower rate?    

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Posts: 32,865
Registered: ‎08-04-2007
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Re: Please Advise

Unfortunately, ratejacking is more and more common now. Congrats on the commitment to PIF that one card.

When you close an account, the balance and the CL are still factored into your utilization as if the account were still open. Once you PIF, and the account is closed, then the CL and the $0 balance is removed from util calculations. The only impact you will see with closing of the $25k CC is the change in the mix of credit. Ideally you'd want to see a couple of revolving CCs w/ one charge card open. If those are the only two CCs you have, then you might see a small drop in FICO scores. IMO, once you close the $25k CC, you'd want to aggressively PIF ASAP.

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