my Exp FICO is 730 I have a card I've had a long time going from 5.5% to 14%. It's balance is about 21k and limit of 25k. I can close account (I don't use it anymore. just used it for balance transfers) and keep paying 5.5% on it until paid off then lose the credit and utilization factor or i can keep it open at higher rate.
Not sure which to do
Hi, it would help if you gave the forum members a bit more information.
What is your total credit card utilization percentage? What other cards do you have and what is owed on them?
Do you have other credit available if you close this card?
That is a rate jack that is going to hurt.
Why would you possibly want to close a revolving account, in good standing, with a 25K credit limit?
You have to pay the balance, open or closed.
Dont close it, Pay it down, and then the APR becomes meaningless. 5.5% of zero is the same as 14% of zero.
If you close it, you will instantly lose $25K in CL, and thus increase your overall % util of revolving credit.
If you have had the card for a long time, you want to retain its age. And you never know when an emergency will strike, and you can call on existing credit.
I see no reason whatsoever to close this account.
Are you saying the $21K is a balance transfer and locked in at 5.5%? If so for how long? Or do you have to opt out to lock in the 5.5% rate? How quickly can you pay off this balance? This is really going to be an economic decision for you based on how much finance charge you project paying at the new and old APR's.
The good news is that closing the card will not effect your UTIL. Both the CL and the balance are included in the UTIL calculation until the balance reaches zero, UTIL changes should not be your concern here - just the finance charges.
it can be paid off in 24-36 months. I can also use balance transfers with existing CL available. I don't use the cards anymore so it doesnt impact monthly cash flow.
So it seems your expert advice is to keep the card open and this the 25k credit util
We just had a discussion on closing a card with a balance and it turns out closing the card wont hurt your UTI, As long the issuer continues to report your CL, it and the outstanding balance are still figured in your FICO score and once the balance is paid, It is no longer factored at that point,
If I were you I'd verify that info to your satisfaction and close the card and pay it off, 14% interest is pretty steep, Also moving that kind of balance around would trash your scores for a couple months as transferring the balances would likey show you with 80% UTI until they report your card PIF,
can you tell me where that discussion is?
Best thing for you to do is calculate what the diffrence will be in the total interest you will pay if you keep the card open vs closing the card. You will then know the exact cost of not opt'ing out and can determine whether you want to keep the card active or not. If you do close the card the CL will continue to be included in your UTIL calculation until the balance becomes zero.