topic Re: Closing a credit card with a balance in General Credit Topics

Closing a credit card with a balance

Np1791 — Mon, 11 Nov 2019 05:10:18 GMT

If I close a credit card with a balance and continue to make payments, will the company then continue to report a payment history even though it’s closed since I am making payments? Making my credit history longer still.

Re: Closing a credit card with a balance

FireMedic1 — Mon, 11 Nov 2019 09:18:29 GMT

Closing a card is just about the same as having it open. You just cant charge on it any longer. So yes it will act as of its still open without new charges. It will still count on your AAoA's for 10 years after closing in most cases. And it is still figured into your util until its paid off. And the balance will reflect whats left until it hits zippo.

Re: Closing a credit card with a balance

pinkandgrey — Tue, 12 Nov 2019 01:54:42 GMT

@FireMedic1 wrote:
Closing a card is just about the same as having it open. You just cant charge on it any longer. So yes it will act as of its still open without new charges. It will still count on your AAoA's for 10 years after closing in most cases. And it is still figured into your util until its paid off. And the balance will reflect whats left until it hits zippo.

This^

It will remain on your report for several years even once closed.

Re: Closing a credit card with a balance

SouthJamaica — Tue, 12 Nov 2019 04:39:55 GMT

@Np1791 wrote:
If I close a credit card with a balance and continue to make payments, will the company then continue to report a payment history even though it’s closed since I am making payments? Making my credit history longer still.

Never ever close a credit card with a balance.

It may wind up getting reported as a totally maxed out card.

Do not close it until it's zeroed out.

Re: Closing a credit card with a balance

FireMedic1 — Wed, 13 Nov 2019 08:29:29 GMT

I have to repectfully disagree. The card’s current balance and credit limit will continue to be factored into the score until paid in full. Expect no initial effect on the score, but some negative impact is possible when the balance is later paid off if you have a high util % on your other cards.

Re: Closing a credit card with a balance

SouthJamaica — Wed, 13 Nov 2019 14:02:45 GMT

@FireMedic1 wrote:
I have to repectfully disagree. The card’s current balance and credit limit will continue to be factored into the score until paid in full. Expect no initial effect on the score, but some negative impact is possible when the balance is later paid off if you have a high util % on your other cards.

You are wrong. On many occasions lenders have treated a card which is closed with a balance as being maxed out. They reduce the limit to the unpaid balance, thus indicating it is 100% maxed. Not all lenders do that, and you may have had a different experience. Which is why I said "may" rather than "will". But the risk is too great to ignore.

Re: Closing a credit card with a balance

FireMedic1 — Wed, 13 Nov 2019 14:28:59 GMT

@SouthJamaica wrote:
@FireMedic1 wrote:
I have to repectfully disagree. The card’s current balance and credit limit will continue to be factored into the score until paid in full. Expect no initial effect on the score, but some negative impact is possible when the balance is later paid off if you have a high util % on your other cards.
You are wrong. On many occasions lenders have treated a card which is closed with a balance as being maxed out. They reduce the limit to the unpaid balance, thus indicating it is 100% maxed. Not all lenders do that, and you may have had a different experience. Which is why I said "may" rather than "will". But the risk is too great to ignore.

Ok. Understood. Thanks!

Re: Closing a credit card with a balance

DaveInAZ — Wed, 13 Nov 2019 21:17:31 GMT

@SouthJamaica wrote:
@FireMedic1 wrote:
I have to repectfully disagree. The card’s current balance and credit limit will continue to be factored into the score until paid in full. Expect no initial effect on the score, but some negative impact is possible when the balance is later paid off if you have a high util % on your other cards.
You are wrong. On many occasions lenders have treated a card which is closed with a balance as being maxed out. They reduce the limit to the unpaid balance, thus indicating it is 100% maxed. Not all lenders do that, and you may have had a different experience. Which is why I said "may" rather than "will". But the risk is too great to ignore.

I agree with @SouthJamaica - when you close a credit card it's going to report $0 available credit, so if you close a CC with a balance it's almost always going to count as 100% utilization because there is a balance with $0 available credit. Once the balance is paid in full it will start reporting as a closed account with $0 balance with the credit limit at closing.

It makes no sense to me to close a CC with a balance, if you no longer want the card just wait until it's paid in full, what's the rush?

And actually I have a couple closed cards that report a $500 CL instead of the actual CL in the thousands - Barclays. I've "PC'd" a couple Barclays cards the "Barclays way" - app & get approved for the new card you want and then call and have them move the CL from the old card you no longer want to the new card and close that card. When you do that for some reason Barclays assigns a $500 closing CL instead of the actual CL. Who knows what Barclays would do if you closed the card with a balance, I don't want to find out.

Re: Closing a credit card with a balance

Anonymous — Tue, 19 Nov 2019 02:04:43 GMT

Agreed with @SJ and @DaveInAZ. Don't close a CC with a balance.

Re: Closing a credit card with a balance

FireMedic1 — Tue, 19 Nov 2019 08:54:11 GMT

Once again @SouthJamaica thank you. Now could you or @DaveInAZ or @Anonymous answer the OP's question? I got the message loud and clear. They got ignored while everyone was pointing things out to me. Thanks.

Re: Closing a credit card with a balance

Anonymous — Tue, 19 Nov 2019 09:17:23 GMT

I thought we all three answered it, it would be FICO suicide to do that!

BUT, if someone was hardheaded and unwise enough to do it anyway and not listen to the advice then, yes, of course the payments would be reported. They are required by law to report accurate payment history. Meanwhile he will suffer.

For OPs own good, I hope he listens to the advice.

Re: Closing a credit card with a balance

FireMedic1 — Tue, 19 Nov 2019 09:25:05 GMT

Thanks @Anonymous No one answered this part until now. "If I close a credit card with a balance and continue to make payments, will the company then continue to report a payment history even though it’s closed since I am making payments?"

Re: Closing a credit card with a balance

Anonymous — Tue, 19 Nov 2019 09:36:27 GMT

But even though he continues to make payments, the close date is not going to change. And it’s still going to fall off, or at least is scheduled and supposed to fall off, at 10 years from that date of closing, assuming it has no delinquencies.

The extended payment history would not extend the time the account would remain on the credit report. The close date would still be the close date and the fall off date would still be calculated from that. So really there would be no advantage whatsoever, only disadvantage.

As a matter fact, the only way I could even possibly theorize that it could possibly contribute would be if his credit history were so short that he didn’t even have a FICO score yet. But even if that were the case, he would still be better served by leaving it open, so he didn’t suffer in the meanwhile even though I guess he wouldn’t suffer for the time that he wouldn’t have a score anyway. But when the score did pop up he would suffer unless it was paid off.