HELP with a decision about closing an account

Anonymous · ‎11-24-2020

Hello, I have a Care Credit account with a balance of $7700. My monthly payment is $250 and interest is 26%. I've been out of work but still making payments. I've called to ask is there any help. They said that they could close my account and set my internet to 0%. This seems too good to be true. Does anyone know of the credit ramifications of this? All she said was that they would report to the credit bureaus that the account was closed. Thanks in advance!

Kforce · ‎11-24-2020

@Anonymous wrote:Hello, I have a Care Credit account with a balance of $7700. My monthly payment is $250 and interest is 26%. I've been out of work but still making payments. I've called to ask is there any help. They said that they could close my account and set my internet to 0%. This seems too good to be true. Does anyone know of the credit ramifications of this? All she said was that they would report to the credit bureaus that the account was closed. Thanks in advance!

A closed account is not going to be a negative event as far a Fico scoring.

The cards good payments and age will report for ~10 years.

If you have other cards and loans with balances it could change your total utilization, and that might lower your fico score. (We don't have a complete financial picture of your other debts and credit limits.)

The 7700 @Anonymous% with 250/mo = 4.33 years to pay off and a loss of $5,137 in interest.

7700 @ 0% with 250/mo = 2.6 years and a saving of more than $5,000

Is keeping the card worth more than $5000?

Anonymous · ‎11-24-2020

Thanks. I'm wondering how they can close my account and drop a 26% interest rate to 0%. How does that work? Don't they need to earn their money for letting me borrow? Seems like there is more to it that I don't know.

Remedios · ‎11-24-2020

@Anonymous wrote:
Thanks. I'm wondering how they can close my account and drop a 26% interest rate to 0%. How does that work? Don't they need to earn their money for letting me borrow? Seems like there is more to it that I don't know.

When it starts looking like there is no chance account will get paid, lender can at times offer reduced or 0% interest through hardship program in an attempt to recover borrowed amount.

Customers have also closed accounts to preserve terms. If a lender sends you a letter stating your interest will be 21% starting next month, and it's it's currently 11%, closing the account prior to change coming into effect preserves terms.

First case scenario will be viewed negatively by the lender (which is fine since you owe a large amount), but spare yourself some grief and do not apply for another Synchrony card while in hardship program.

Is this your only Synchrony card?

Anonymous · ‎11-24-2020

I have two more synchrony cards. Amazon credit card with a $100 limit. Current balance is like $28. Also, rooms to go credit card with a balance of $365. I think the limit is about $1200.