Negatives to cancelling a credit card?

[Juliet25]

So I got the interest raising letter from Chase Disney a few weeks ago. I carry a balance but I don't use the card for purchases, so it makes sense to me to close the account and pay off my bill under the current terms and be done with that card. However, will this negatively affect me in any way? Will it trigger other cards to raise my rates or lower my credit limit? I realize it could have a negative impact on my credit score, but how many points are we talking here?

 

[SandrA9810]

I'm fairly surprised, I closed two cards and it only hit about 10-15 points on the score. Of course it depends on how big your limit is. With so many people getting hit for various things and banks changing hands, I don't think in a couple years it will hurt you much at all.
Truthfully, are you looking for renting an apartment, buying a house, buying a car, any kind of big purchase, applying for a job?? If these aren't things you're looking to do in the next few years, your score should bounce back without much harm to you.

 

[Juliet25]

Truthfully, are you looking for renting an apartment, buying a house, buying a car, any kind of big purchase, applying for a job?? If these aren't things you're looking to do in the next few years, your score should bounce back without much harm to you.

We do hope to buy a new house in a year or two, so getting a good rate on a mortgage is the big concern. We currently own a home and are current on our mortgage. Everything's in good standing and we have decent credit scores.

 

[a1tinkfans]

If you have ANY interest in getting a better rate, do not cancel IMHO.


You WILL get affected negatively. By closing the card you are in effect LOWERING you credit worthiness, thus INCREASING your DEBT ratio....you'll owe a LARGER % than before...hope you follow..(if you had 50K total credit line available overall, and owed 5K it'd be 10% debt, now lets say you close your 10,000 credit card THAT reduces your total CREDIT to 40K and still owing 5K, you now have MORE than 10% debt.which shows as an increase and banks and lenders use THAT to increase rates...its a vicious cycle indeed!...).... its VITAL to keep your accounts current and pay every little bit extra you can, BEFORE applying. I know, harder rather than easier but MAY really make a world of difference in the long run.....

Best of Luck to You!!!

 

[SandrA9810]

If you're talking a 1-2grand credit limit, then you could probably close it without much affect. Anything greater than that and you might be taking a risk. Is it a joint card or just solely on one person's name?? because if it's only on one, it should leave the other score to bring up the first.

You're other choice is to just pay it off if you can, then about 6 months to a year after you purchase the home to close it off. Do not do it within a few months cause the banks stay on top of your credit report... I've heard of people having the banks retract the mortage because they went off and spent thousands on new furniture and stuff, greatly hitting their credit limits.

 

[prncess674]

If you have ANY interest in getting a better rate, do not cancel IMHO.


You WILL get affected negatively. By closing the card you are in effect LOWERING you credit worthiness, thus INCREASING your DEBT ratio....you'll owe a LARGER % than before...hope you follow..(if you had 50K total credit line available overall, and owed 5K it'd be 10% debt, now lets say you close your 10,000 credit card THAT reduces your total CREDIT to 40K and still owing 5K, you now have MORE than 10% debt.which shows as an increase and banks and lenders use THAT to increase rates...its a vicious cycle indeed!...).... its VITAL to keep your accounts current and pay every little bit extra you can, BEFORE applying. I know, harder rather than easier but MAY really make a world of difference in the long run.....

Best of Luck to You!!!

Yes but having large open lines of credit can also have a negative effect on being able to get additional credit. The banks think you have a big open line that you could run up at any time and hence will lower the amount they are willing to loan you.

Closing one card isn't going to make your score plummet to the point of not being able to get a mortgage. If the new rate is out of control I wouldn't hesitate to cancel the card assuming you have another card to use for emergencies and other unforseen purchases. There is a difference between cards closed by the bank and cards closed by the consumer. Consumer closed are not nearly a bad a ding as a card closed by the bank.

 

[nowellsl]

If you have ANY interest in getting a better rate, do not cancel IMHO.


You WILL get affected negatively. By closing the card you are in effect LOWERING you credit worthiness, thus INCREASING your DEBT ratio....you'll owe a LARGER % than before...hope you follow..(if you had 50K total credit line available overall, and owed 5K it'd be 10% debt, now lets say you close your 10,000 credit card THAT reduces your total CREDIT to 40K and still owing 5K, you now have MORE than 10% debt.which shows as an increase and banks and lenders use THAT to increase rates...its a vicious cycle indeed!...).... its VITAL to keep your accounts current and pay every little bit extra you can, BEFORE applying. I know, harder rather than easier but MAY really make a world of difference in the long run.....

Best of Luck to You!!!

I don't carry balances so closing a CC wouldn't hurt me as the utilization would stay at 0%. If it happened to be my oldest card it would hurt me because it would lower the age of my credit history. If you have a large balance and low credit lines, it would probably be in your best interests to keep it open at least until you pay it down.

 

[Juliet25]

It looks like my interest rate on the half the balance I'm carrying would jump about 3% (the other half is fixed). I wish I have a chance of paying it off. I don't, but we're going to be working on that this year. I want to do a balance transfer, but none of my other cards are offering them. For the first time EVER. It's so frustrating. I guess I'll keep it open for now.

Thanks for the advice.