I started a hardship program with discover august of last year in which I agreed to a lesser APR while my charging privileges were suspended. I ended the program in April, and still have not had my charging privileges restored. I was wondering if anyone had gone through anything similar? any time I reach out to discover they just tell me that my account is reviewed " every so often" and that they will notify me when my account is restored. I have payed far more than the minimum payment every month and now only have a $200 balance, which I am hesitant to pay off thinking they may just cancel my account resulting in lower credit scores for me.
Why would you be hesitant to pay off now with only a $200 balance?
Even if they close your account (which is their absolute right), wouldn’t you rather have an a closed account in good standing vs a $200 charge off?
Unless you have high utility on your other accounts (and you need the utility padding from Discover), you shouldn’t see a huge drop in scores.
Closing an account if you bring it to a $0 balance first will likely have no impact on your credit scores. The only way it would is if you had balances on other revolving accounts and losing the utilization from the Discover account would cause your aggregate utilization to raise across a threshold.
You should just pay off the $200, then contact Discover after the $0 balance reports and see what they'll do in terms of restoring your account to the terms it had previously.
I kept a Discover card maxed out for about 2 straight years. I got as high as 7992 of 8000 earlier this year, hovered around 7800 balance due, auto-paid the minimum each month. Once I got things under better control I paid, over two months, the balance down to 5,300 (still 66% Util) and was approved for: a CLI to 12,000 & second card with SL of 3,000.
I'd bet paying the $200 balance off will have pleasing consequences for you.
(Of course, as has already been said, what better alternatives do you have?)
I mostly just thought it would be better to pay the $50 a month that I have been to prove that I am responsible enough to continue making payments. That was really the only communication I have received from discover. I have only missed one payment from them in my three years with them, and that was when I entered the program. Just didn’t know which route to take as I would like to keep this account open. Thank you for the kind advice
Take this with a grain of salt as I have no firsthand experience, but, it seems to me if your full priveleges are to be restored, a balance owed of zero would be a prerequisite. This would "graduate" you from your 1/2 of the "deal." And I would think the sooner you get there, the better.
As to the quoted bolded text: I would think they'd rather have all their money back, and have moved your account from out of this last ditch program, then watch you dole out $50 per month back to them, ad infinitum.
^ Yes, paying off the complete balance for that agreed upon deal is required before they'll consider restoring it.
Though I imgine that after such an ordeal, your acount will not be the same as before.
I mostly just thought it would be better to pay the $50 a month that I have been to prove that I am responsible enough to continue making payments.
This is a common misconception. When money is lended out, lenders want it back ASAP. There are terms to all lending that state how fast it needs to be paid back, whether it's a revolver or an installment loan. Paying it back at the terms agreed upon is a minimum expectation. Paying it back quicker isn't a bad thing. I think we see this a lot with things like car loans. Someone will pay a $15k loan down quickly (multiple extra payments) to a few thousand dollars left and then go to just paying the minimum (required) monthly payment in an effort to keep the account open longer or try to show a longer history of [on time] payments. Certain sites like Credit Karma manipulate members into thinking that more payments means a better profile/score by showing them fancy/colorful charts/graphs that suggest that's the case when it is not. When it comes to a revolver, there's no benefit at all in making minimum payments. Quite the opposite, actually, as prolonging the paying off of the debt simply means more interest needs to forked over.