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Member
Chanbot
Posts: 15
Registered: ‎06-01-2010
0

Wanting to close a checking account and overdraft protection. how would that affect my score?

[ Edited ]

Hello everyone, I have a dilemma...

 

When I first opened a Citibank EZ Checking account years ago, it was a very fee-free account.  No minimum balance req, no monthly fees as long as you make two bill payments per month from your account.  Well, over the last year this has changed, and my account is subject to monthly fee charge if average daily balance of $1500 is not met : (  I also have a small line of credit linked to this account.  This used to be that we pay a small annual fee and it will cover for accidental overdrafts, and you will just pay the interest on whatever amount you overdrafted.  This also changed over the last couple of years.  Now, they charge you $10 every time you over draft, plus they automatically transfer a sum rounded to the $100s to your checking and charge APR over that amount instead of the amount you actually went overdraft, so even if your overdraft was only $2, you are still paying APR based on $100. 

 

I have been unhappy with this new policy for a while now and have been pondering about ending business with this bank.  However, couple of circumstances concern me.

1) I have had some sort of checking/savings account with them for about 10 years now

2) the OD line of credit, however, I've only had for the last 4 yrs or so and there are plenty of other creditcards that have been on my report longer tha that.

 

So, I guess my question is, would it do much harm for me to close my checking account with Citibank (consequently closing associated line of credit)?  I have the same question for my OTHER citibank checking account, which is a joint account with my husband which we opened about 4-5 yrs ago.  This one has an OD line of credit of $5000... but again, I do not really agree with their banking policies right now and because I have other checking accounts like INGdirect and Schwab that are much more "customer friendly" in my opinion, I prefer to phase out of Citi and start using one of those as my main bank : ( 

 

What do you recommend that I do?

Oh and in case this changes the picture... my revolving line of credit CL totals to be about 35K and my husbands CL totals to be about 50K, plus we recently bought a condo about $390K with about $80K down... so if the inpact of closing the said checking accounts and the associated OD line of credit is minimal, we would like to go ahead and close.

 

What do you think?

Member
Chanbot
Posts: 15
Registered: ‎06-01-2010
0

Re: Wanting to close a checking account and overdraft protection. how would that affect my score?

Oh and thank you for your input in advance : )

Member
Chanbot
Posts: 15
Registered: ‎06-01-2010
0

Re: Wanting to close a checking account and overdraft protection. how would that affect my score?

bumping in hopes this catches someone's attention : )

Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
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Re: Wanting to close a checking account and overdraft protection. how would that affect my score?


Chanbot wrote:

When I first opened a Citibank EZ Checking account years ago, it was a very fee-free account.  No minimum balance req, no monthly fees as long as you make two bill payments per month from your account.  Well, over the last year this has changed, and my account is subject to monthly fee charge if average daily balance of $1500 is not met : (  I also have a small line of credit linked to this account.  This used to be that we pay a small annual fee and it will cover for accidental overdrafts, and you will just pay the interest on whatever amount you overdrafted.  This also changed over the last couple of years.  Now, they charge you $10 every time you over draft, plus they automatically transfer a sum rounded to the $100s to your checking and charge APR over that amount instead of the amount you actually went overdraft, so even if your overdraft was only $2, you are still paying APR based on $100. 


I'm not pure and I've let a check or two or three slip past me, but if they transfer $100 from the overdraft and you only need $2 plus a fee if applicable, then you can always immediately transfer the remainder back and pay no interest on most of that. Now there are plenty of options for no-fee accounts out there, though.

 


Chanbot wrote:

I have been unhappy with this new policy for a while now and have been pondering about ending business with this bank.  However, couple of circumstances concern me.

1) I have had some sort of checking/savings account with them for about 10 years now

2) the OD line of credit, however, I've only had for the last 4 yrs or so and there are plenty of other creditcards that have been on my report longer tha that.

 

So, I guess my question is, would it do much harm for me to close my checking account with Citibank (consequently closing associated line of credit)?  I have the same question for my OTHER citibank checking account, which is a joint account with my husband which we opened about 4-5 yrs ago.  This one has an OD line of credit of $5000... but again, I do not really agree with their banking policies right now and because I have other checking accounts like INGdirect and Schwab that are much more "customer friendly" in my opinion, I prefer to phase out of Citi and start using one of those as my main bank : ( 

 

What do you recommend that I do?

Oh and in case this changes the picture... my revolving line of credit CL totals to be about 35K and my husbands CL totals to be about 50K, plus we recently bought a condo about $390K with about $80K down... so if the inpact of closing the said checking accounts and the associated OD line of credit is minimal, we would like to go ahead and close.

 

What do you think?


Closing a checking account will never impact your FICO score since the only time checking accounts report is if you default.

 

Does the overdraft line report? If not, don't worry about any of it since there's no potential impact on your FICO score or credit. If it does report, then it probably reports like a LOC. You'd treat it just like a CC.

 

If the overdraft TL reports, check out fused's thread on Closing Credit Cards. Basically there are two things you want to look out for: 1) mix of credit and 2) impact on utilization after closing it. Other cosiderations like length of history won't enter into it for another 10 yrs and it'll still report for some time to come. If you have other CCs, then ignore #1. If this overdraft has a high limit, with a zero balance, then there could be an issue if you are carrying balances on your other CCs. You'd have to do some math with your reported CC balances to see if your overall util would go up if the OD is closed (again, if it reports).

 

 

Member
Chanbot
Posts: 15
Registered: ‎06-01-2010
0

Re: Wanting to close a checking account and overdraft protection. how would that affect my score?

Hey, thanks so much for your response! I think right now, out of the 35K approx total credit limit I have (and yes, majority of these are through credit cards.  I have another 20K student loan from years back aside from this and the balance on that is about 10K now), I have a balance of about $5000... so from what you are saying, sounds like getting rid of $500 out of that shouldn't affect things too too much, would it?  As for the joint checking account we have... I forgot to mention that I happen to be the primary account holder on that one too... so I guess that will mean that if I close that one too, that will be a $5000 dent on my ratio... and not to my husband's CL? hmmmmm...

 

I am thinking that maybe for now, I should close just my account and keep the joint account for a couple of months longer to check the waters... what do you think? We need to buy a second car (so I have access to one car as opposed to taking buses or borrowing my husband's car) soon and also need to do some remodeling to our new condo... so while I want to get rid of these Citibank  accounts badly I don't want to act too fast and do anything that will hurt our credit now : P


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