I handle all our finances, including credit card payments each month, and yesterday, we got a notice on a joint credit card that the interest will be going from 22.9% to 32.9% in April.
They gave us the option of closing the account to keep the current terms. We are close to maxed out on the account. This extra interest will amount to $610 a year, or about $50 more per month. We are overextended on our credit cards and other credit, but we have no adverse accounts on the credit report, all accounts are paid properly.
The credit rating is not the best, but it is currently 630.
- Is it better to close the account and keep the current terms, or keep it open and pay more, but focus on paying extra to get the balance down faster?
- What would it do to our credit rating to close the account?
- Will the minimum payment go up when the interest rate goes up?
I need some advise quick before I broach this with my husband.
If you can pay off the account to get out of being screwed with this interest rate being jacked up, I would do it.
If you don’t have the money to pay it off, I would work hard at sending in extra money to the account as soon as possible, a little every payday if possible, and do not use the card anymore. Once paid in full, just leave it there.
I would suggest that you just stop using it, but do not close it. If you have had it for awhile, it cuts off the “old age” status of your credit history. Meaning, if you have had it for 5 years or more, when you close it, your next newest account may be only 2 years old. Not good. Also, the amount of the credit limit shows that you have had it increased to $_______ amount by now, even though you have just about maxed it, as you stated. If you close it, the “available” credit that you have gets dinged, showing you as less “trustworthy”. Creditors will not see that you have been trusted with $15,000 worth of credit when this account is closed, and if your next highest limit is just $5,000 they will adjust their offers accordingly.
I hate that the companies are jacking up your interest rates this way! I had one company that tweaked our limit because they did a “review” of our credit report and changed it. We paid off the account, but we have not used it anymore. It is still open, but we will just leave it there unused. Not worth it.
I am wondering if you could roll the balance over to a1 year zero percent interest card? Did they give any reason as to why they are raising the interest by
10% more? I’d close out and keep the lower interest and stop dealing with them. I had to do that to Juniper when they did the dirty on me.