Is closing the same as "burning"? (in regards to B of A)

[Candice]

Hi everyone,

I have a quick question. I have a B of A secured Visa. I recently applied for a loan from my local CU for $2,000 to purchase some new things for my new apt. They have approved me (EQ 542) but want me to close my B of A credit card (secured for $300) and my  Orchard Bank MC ($320 CL). I don't want to do this, at all, because I just got the cards. The OB I guess I wouldn't really mind, but I don't want to make B of A mad at me and then never be able to get a card throught them.

My question is this: if I was to cancel a secured card, is that the same as "burning" the bank? Or are they usually open to allowing you to get cards thru them again at a later date?

[tonsers]

What exactly is the reason behind them wanting you to close the cards?  I could understand if they were worried about you running up debt and not being able to pay the loan back... but it's a secured card???  I would try to discuss this further with the CU.

[PayYouNever]

My understanding is the when you get these personal loans, CU and other creditors want you to apply all your resources to paying them off. I assume that you're applying for an unsecured loan from the CU, right?

I did this earlier this year, and the finance company issued me checks to pay-off the balances on my three credit cards... thus I only had one payment to make each month. Of course, I had to dip into those cards as things started getting bad financially in the fall. 

[manyquestions]

That sounds crazy.  Did they understand that these are secured cards?  I wouldn't do it unless you absolutely need to have that loan.  As far as will someone give you another card later if you close a secured card in good standing, I don't see why they wouldn't, closing a secured card is not at all like burning the bank.   But it does not make much sense to close them now.  The credit limits are so low and they are secured, I don't see how this adds much risk to the loan.   If the CU does not demand to see the cards closed before they give you the loan, I would be noncommittal and just say something like I will look into what I have to do to do that, are they really going to check to see that you closed them? Probably not.  Since you have low FICO scores they probably just said whatever popped into their head about how they could reduce the risk of the loan, its not like you have two $5000 unsecured cards that you might run up and then lower your ability to pay back the loan.  I wouldn't do it and see what happens, you can always close them later if they demand it and you feel you need to have the loan from that CU.

[Anonymous]

Ask them if you can just cut up cards(so they don't worry about you "running up" debt and not being able to pay them) until loan is paid off and see if okay. But if closing them is 100% condition personally i would walk unless you really need the loan

[haulingthescoreup]

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Candice wrote:

...My question is this: if I was to cancel a secured card, is that the same as "burning" the bank? Or are they usually open to allowing you to get cards thru them again at a later date?

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I think you're referring to other posts where someone says that they burned Bank X, so they're not going to try again with them. In those cases, "burning" generally refers to having included an account with that bank in bankruptcy, or maybe a serious unpaid charge-off. In other words, that bank lost money on them at some point.

I wouldn't include closing (and paying off) a card under "burning."

I'll let the others go on with their advice; I just wanted to address that question. Good luck!

[fatjoe8]

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@PayYouNever wrote:

My understanding is the when you get these personal loans, CU and other creditors want you to apply all your resources to paying them off. I assume that you're applying for an unsecured loan from the CU, right?

I did this earlier this year, and the finance company issued me checks to pay-off the balances on my three credit cards... thus I only had one payment to make each month. Of course, I had to dip into those cards as things started getting bad financially in the fall. 

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Hey, which finance company did this?? I would love to get a loan and pay off my remaining 1600 in credit cards, and then only have 1 payment per month? What credit score is needed for this? I'm mid 600s