Thread: Change of terms, not accepted.

Hi,

Recently a card which I have had for about 4 years and on which I had a very good rate, changed the terms for the worse and the rate went up. This was not because my credit worthiness changed. Most likely because I carry a low balance and they weren't making any meaningful dough off me. Anyway, the rate doubled from 7 to 14.

I'm not about to accept that so I told them that I would not accept the new terms. This means that they will close out my card when it expires later this year.

My question is, if I let it expire like that and they close it. What kind of a credit hit should I expect to take? Would my rating get back to 'normal' within a coupla months?

Thanks!

Hmmm... someone else posted about this the other day. Sounds like a new trend may be emerging. Well, first off, I'm not sure your credit scores will be affected by simply closing a revolving account.

There are a ton of factors that are in play and it's not like your credit card company can close the account with negative remarks (and if they do, you can dispute it and get it removed anyway).

I imagine you'll be alright, but you might try calling customer service to see if you can't negotiate a better rate to a point where you're okay with keeping the card active.

The FICO web site says the closing of an account won't affect one's score, ant it really makes sense that it doesn't. Closing out a 36 month personal loan doesn't affect one's score, why should a line of credit?

In this day of ID theft, closing unused/unwanted lines makes ID theft that much more difficult.

Closing out a revolving credit line usually does have an effect on your credit score. The account becomes inactive and closed. Your maximum available credit is reduced. However, if you have other ample accounts established the effect would be very minimal.

The trend is here. Credit card companies are cutting borrowers credit lines down and causing them to exceed the trigger for balances too high in relation to credit limits. They are also changing the terms of the cards and giving the card holder an option of the new apr or opting out and never using the card again. (Keep the same terms,close the account, and just make payments)

People who once had $25,000 or more available are cut down to 0 and as they pay down the balance the credit card company sometimes sends new letters every so often to tell them they cut the credit line again.

The last thing banks want to do right now is leave trillions of dollars open as available credit when they nearly all are in need of TARP funds or have liquidity issues. Also more borrowers are taking funds out on the cards due to the struggling economy then eventually defaulting. They want to limit their exposure to default.

That makes a lot of sense, Greg.