Cancel credit card ?

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I once carried a large introducory interest rate balance on a card. (about 1.9%, much lower % than the car I bought with the money) My balance was about $4500 and my credit limit was $10,000. I asked them to lower my limit to $5000. Big mistake. Now the credit companies looked at it as if I had the card almost maxed out! That's a bad thing.
I read ahead and saw you don't carry a balance, so you will be OK canceling it. But if you carry a balance on one card, it is good to have more credit available on that and/or other cards. They do like to see a lot of available credit that you aren't using, but if you have three cards paid in full each month, you are looking good to them.
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If you are paying revolving interest type loans in full each month you are NOT looking good to them. They are not making interest on lending money to you. You will have a lower credit score.
Why would a credit card company consider you a good customer if all they do is lend free money to you. You have to think like a lender in this situation. People wo pay their credit card bills early are just as deadbeat as people who never pay them because the lender made NO profits by advancing you a loan for a period of a month or two.
You are thinking like a smart borrower. Pay off before interest kicks in. But lenders don't want customers like that so smart borrowers do not look good.
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On 1/17/2011 7:43 AM, The Henchman wrote:

The lenders are OK with it, they already have their percentage from the store where you used the card. They make money either way. They make less my way, but they also see a responsible person who they doubt they will ever have to chase down to collect the debt.
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The lenders are OK with it, they already have their percentage from the store where you used the card. They make money either way. They make less my way, but they also see a responsible person who they doubt they will ever have to chase down to collect the debt.
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Yeah I see your point. If a credit card issuer issues enuf cards and gets those customers using them at merchants, the issuer earns a profit when it collect merchant fees even if they never see a penny in borrower interest. That's a good point.
But from the aspect of a borrower's credit score, lenders making money from merchant fees is a non-factor when calculating a score. Your credit score is influenced by a lender's ability to collect borrowed money with interest, not on the ability to collect merchant fees.
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wrote:

No, it's not (or at least it's not supposed to be). Your credit score is (theoretically) a measure of your credit-worthiness (the likelihood you won't walk away with the money) based on your past payment history, usage, and credit availability from the data on your credit report.
I just pulled my Transunion report, and nowhere does it indicate whether I've paid interest -- all of the balances are the most recent month's purchase total and per-month "OK"s; no way to tell whether it was paid in full or something lower.
Your income doesn't even factor into your credit score (it's not on your credit report). Lenders do, obviously, ask for (and sometimes verify with paystubs etc) income, and use that to set your actual credit limits, but that's separate from the score.
Now, I wouldn't be surprised if some card companies used your history carrying a balance/paying interest *with them* to decide whether to keep or drop your card, but I've never had that happen.
Josh
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wrote:

Interesting. Maybe I shouldn't have said what I said about it not affecting the credit/debt ratio if you pay in full each month. According to what you said they just use the balance at the time they do the report. Makes sense for easy accounting. Still not convinced that the Transunion and other reports have everything that go into developing the FICO. So much of the whole apparatus is "secret."
One simple way to get an idea would be to get your FICO score, then without changing other habits, add a credit card. Then get your FICO score again. But you have to pay for your FICO score unless you go about it by having somebody who can pull it for you. Of course that's a "hit" against your FICO score! Sweet deal they got going.
But I still say that worrying about the FICO score is immaterial for those not deep in debt and paying bills normally. For those the score is going to be good enough not to affect any thing they do. But I'm guessing - because the algorithms are secret. And I haven't taken out any kind of loan in many years, except mortgage refis. Always got terrific rates on those.
--Vic
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On 1/17/2011 11:54 AM, The Henchman wrote:

Ahhhhh, no. I just checked my credit score and there is no way I'd get a score so high if it depended on collecting interest. No way at all.
But I do have 0 negatives and 17 accounts in good standing.
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Complete bullshit.

1. The CC company isn't the one creating the "score". 2. They still make the transaction fee.

I'd be happy with 5% of the DGP. So happy that I'd even give you 1%.
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Well, I cancelled most of my cards two years ago and some of them threatened my credit, but I didn't notice.
                 - = - Vasos Panagiotopoulos, Columbia'81+, Reagan, Mozart, Pindus, BioStrategist http://www.panix.com/~vjp2/vasos.htm http://www.facebook.com/vasjpan2 ---{Nothing herein constitutes advice. Everything fully disclaimed.}--- [Homeland Security means private firearms not lazy obstructive guards] [Urb sprawl confounds terror] [Phooey on GUI: Windows for subprime Bimbos]
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I cancelled a bunch of credit cards a couple of years ago and my credit score's quite high.
One thing, though, is that it seems to have gone up when the one loan I did have went away. It was a 0% loan for the purchase of some equipment, but it was somewhat incorrectly reported as a fully-tapped credit line (which hurts your credit). When I paid it off my score went up. Of course the cash I used to pay it off was no longer available to me, so my actual financial situation didn't change.
In theory one's credit score is a somewhat accurate reflection of your debt-paying ability but that's on average- it's still got a lot of problems:
1. They don't know how much money you have- you could have a million dollars in investments, or no savings. They also probably don't know what your house is worth, or even that you might own three or four of them. 2. Having more credit (unused cards, for example) is seen as a positive. In theory this is good for them because it's a source of cash if you need to pay other debts- borrowing from Peter to pay Paul is okay if you're Paul-- but it's stupid because if people get into financial trouble they will max out their credit cards. 3. They have no way of knowing how secure your employment is, nor how much your income varies from year to year in the same job. 4. They don't really even know how much you make. Sure, the credit card companies ask you- but they rarely if ever check (I know because they have always asked for my work phone # and only once did someone call to check, a long time ago, and whom did they ask? ME!).
A friend of mine got a high credit limit because he was self-employed and they asked his household income. He took their question literally- he was living in a house with about a dozen other people, so he gave them a high number.
To answer your question- if you have enough other credit you're not using, cancel away. Although if you're about to get a mortgage you might not want to change anything right now.
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The HELOC is another encumberance on the same property. So, you were probably hit more because the HELOC (even though unused, but could be) effectively lowered your equity in the house. If you were buying a car instead of refinancing a house, it probably wouldn't have impacted as much.
--
"Even I realized that money was to politicians what the ecalyptus tree is to
koala bears: food, water, shelter and something to crap on."
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wrote:

A lot of it is a dice game. The HELOCs are variable rate, so unlike the fixed you have to be able to pay it off if rates jump. If you can do that it's a good play I had a zero balance HELOC for a while as a safety when my job looked dicey and my mortgage principle was still high. I could use it to pay my mortgage if I was out of work. Luckily never had to use it. But it never came close to beating my fixed, or even my variable rate mortgage when I refied. But the HELOC was prime +2.
--Vic
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"Higgs Boson" wrote in message
I want to cancel a Visa that I never use (from Bank of America, tfui, tfui). I searched long and hard on their Web site to find a link, and finally came across the following:
http://tinyurl.com/48p2qo7
They "threaten" that cancelling a card might lower one's credit score. ??? Is this true? Or is it a marketing gimmick?
Your real-world experience valued.
HB
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A trend is appearing that unused credit accounts will be subject to yearly account fees. Like $25 or $35 a year fees. That's what they are starting to do in Canada and our banking system is a lot stronger than the American for the time being. I'm surprised it hasn't happened yet in the US.
For security and peace of mind if it were me. It's another account that's open to fraud or misuse to theft etc etc.
I'd cancel the card and stop worrying about credit score. Your credit score fluctuates every day anyways. As long as you are over 750 you'll always be entitled to the best rates.
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They'll find a *lot* of closed accounts. Don't think that's going to happen, not when they're making the vig on every transaction.

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Higgs Boson wrote the following:

Don't cancel it. http://www.creditcards.com/credit-card-news/cancel-credit-card-and-impact-credit-score-1267.php
--

Bill
In Hamptonburgh, NY
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-snip-

Yup- I got that one. I read that letter 3 times, on three different days because I was sure there was a hitch. I got 20K & set up an auto-payment from my bank-- and paid my $5/mo AOL account, and a $2/mo website. Seems like it was a 5yr payback or so-- not bad for $7/mo, even if I wasn't using those 2 accounts.
If Discover hadn't been such pricks with all the solicitations over the next month I would have been their friend for life. It took some major threats and a talk to a 2nd level supervisor to convince them that I wasn't buying anything else. And never will. [though I've been tempted by their 5% gas reward card]
Jim
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wrote:

It's easy to deal with the solicitations. Set up a custom ring tone known as "silent". That took care of the clowns from Citibank, who always call from the same phone number. They rarely leave messages, so all I see when I look at the phone is a missed call.
Discover did something interesting a few years ago. I paid off my balance and didn't use the card for a year. I got a note saying they were raising my rate from 14% to 19%. No problem. I wasn't using it anyway. Then, I got a call from some genius who wanted to know if there was anything they could do to entice me to do business. I asked the women if she could see my rate history on her screen. She said yes. I asked if she had any further questions. She didn't. I said goodbye.
Silly people.
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I feel sorry for the phone service people who have to convey some of the scripted bullshit given to them by higher-ups. Chase raised my rate from 9.9% to 14.9% a year ago. I asked why. The answer was something foolish, like "Increased cost of doing business". Translation: We're bailing out the company's sorry ass after years of bad management.
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I'd keep it, use it once in a while, and consider it a backup in case you lose the card you use on a regular basis. It's also good if you and the spouse go on separate trips. If one loses a card, the other guy is not left high and dry.
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On Mon, 24 Jan 2011 06:53:07 -0800 (PST), Kalmia

Or if your CC company sees some activity that it deems suspicious and suspends your account. Or there *is* fraud and you close the account. In the first case it is easier while standing in line to just whip out another card and deal with it later.
When your account has some fraud, you close that account and it might take 4-5 days to get the new cards.
CCs are like guns-- *they* don't cause problems, the people do. . . and the more you have, the merrier.
Jim
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And the computers seem to be getting a wider view of suspicious. We had been coming down to FL or Caribbean over Christmas for the latst 30 years, yet two winters ago, I tried to use the card for gas and it was refused. Called and asked why, they said the computer had flagged my use of the card in FL as suspicious. I mentioned the above time line, the guy said he was sorry and that he would reactivate the card. Anytime I leave town any more, I call and let them know.

The year after the above, I was back down in FL and had the card declined again. Got REALLY PO'ed and called the company ready to raise 6 shades of Hell because I HAD called this time. Turned out the computer flagged some charges in LA, nowhere near where I or the card was. I then became more tolerant of the computer (grin).
--
"Even I realized that money was to politicians what the ecalyptus tree is to
koala bears: food, water, shelter and something to crap on."
  Click to see the full signature.
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