Lowering your credit limits

[sdshorty]

Ugh, so I heard this was happening to some people, and it just happened to me with 2 of my cards, UGH.

I like having high credit limits because if I keep my balances low it helps my credit score. Well I was basing my percentage of debt on 1 of my Visas based on my credit limit. I get a letter last week from my credit union telling me they are lowering my credit limit from $5,500 to $3,500 , that is a HUGE drop. They just say its because of the economic times, blah blah blah, not because of anything I did, because I've always made large monthly payments and kept my balance low with them. Ugh, now I have to hurry up and try to pay off the balance I have with them because now suddenly with this drop in credit limit, the debt to credit available ratio has changed drastically .

I hate playing the 'trying to keep your credit score high' game

Now my question is, I don't really want to deal with them anymore, once I pay off my balance with them i was thinking of closing the account. BUT, I'm wondering, since I've had the card for about 3 years now, should I just keep it and hide it away somewhere even if I have to pay a small fee for keeping the balance at 0, or would it be a good idea to just close it.

[Kris]

I have always been told that closing the account is a bad thing. It is better to keep it rotating with no balance.

[MOS:armywife]

Originally Posted by Kris I have always been told that closing the account is a bad thing. It is better to keep it rotating with no balance.

I was told the same thing, but personally I would just close it, unless its the only one you have then I would keep it open. I dont know about anyone else, but im working on being completely credit card free & building an "oh ****" fund so I wont need a credit card. I just paid off 3 credit cards & cancelled 2 of them, One i canceled because their fees were absolutely ridiculous & the other was because it was to a store I dont go to but 2-3times a month if that. seems to me that if im making payments on a CC why shouldnt I start putting that into savings so it will gain interest rather than me having to pay the interest.

[Brandi]

We're in the same situation. We recently paid off literally every single balance on all of our cards (we had small balances spread over about 8 different cards). When we started getting notices of our rates jumping by like more than 10%, I gave serious consideration to closing every single card we have. However, I have rethought it and decided that I will keep them open and just keep VERY low balances on them just to keep something revolving, but pay them off for the most part each month so that we don't have to see that ridiculous interest fee added each month.

If you have a fee, you could probably get the fee taken off all together or waived on a year by year basis just by calling in. I've had several cards with fees, and I got them either cancelled or waived by calling the company and telling them that I was thinking of closing the card b/c of the fee. They will almost always work with you.

ALSO, it doesn't hurt to call and ask for a lower APR either. The worst they can do is say no but sometimes they will agree to lower it (or at least lower minimum payments) if you say you're thinking of canceling. Like I said, the worst they can say is no.

[*Pamela*]

Originally Posted by Brandi We're in the same situation. We recently paid off literally every single balance on all of our cards (we had small balances spread over about 8 different cards). When we started getting notices of our rates jumping by like more than 10%, I gave serious consideration to closing every single card we have. However, I have rethought it and decided that I will keep them open and just keep VERY low balances on them just to keep something revolving, but pay them off for the most part each month so that we don't have to see that ridiculous interest fee added each month. If you have a fee, you could probably get the fee taken off all together or waived on a year by year basis just by calling in. I've had several cards with fees, and I got them either cancelled or waived by calling the company and telling them that I was thinking of closing the card b/c of the fee. They will almost always work with you. ALSO, it doesn't hurt to call and ask for a lower APR either. The worst they can do is say no but sometimes they will agree to lower it (or at least lower minimum payments) if you say you're thinking of canceling. Like I said, the worst they can say is no.

Use the Servicemembers Civil Relief Act. SERIOUSLY. It drops everyinterest rate to 5.99% plus has about a million other perks.

http://usmilitary.about.com/cs/sscra/a/scra1.htm

[Navgirl]

Originally Posted by *Pamela* Use the Servicemembers Civil Relief Act. SERIOUSLY. It drops everyinterest rate to 5.99% plus has about a million other perks. http://usmilitary.about.com/cs/sscra/a/scra1.htm

But only on debt before active service.

[Melanie.]

Too high of an empty balance on a high balance credit card can also be bad for your credit score. But then again the debt to free credit ratio is also bad...it's a crazy weird game.

Credit union cards...I would keep - credit unions tend to be more secure since they're funded by 'members' and stuff from what I've heard.

I'm just glad actually that I filed bankruptcy 2 years ago and am not credit worthy - so I have no credit to worry about in all of this mess...ONLY good thing about the ex messing up my credit so badly.

[Roxie0816]

i was alwyas told that it doesnt hurt your credit unless the CC company/collections etc cancels your card....if there is a zero balance and you decide you no longer wish to use that card and cancel it yourself it won't hurt you...does anyone know if this is true??

[sdshorty]

Originally Posted by Roxie0816 i was alwyas told that it doesnt hurt your credit unless the CC company/collections etc cancels your card....if there is a zero balance and you decide you no longer wish to use that card and cancel it yourself it won't hurt you...does anyone know if this is true??

Well it DOES affect your credit, because if they lower the limit on your card, then immediately your available credit to debt gap gets smaller, meaning you have less available credit, which in turn lowers your credit rating . There's been stories of people who got their credit limit lowered without knowing it, and then suddenly they were OVER their credit limit because the bank/cc company decided to make their limit lower than what their balance was

[Christina]

they did this to us too..well to DF not to me. they lowered his from $15,000 to $2150 because of "tough economic times." he pays his bill off TWICE a month so it's total bull****.

if there's a fee for keeping the balance at zero, i'd probably close it. otherwise i'd just keep it open forever and forget about it. but i'm no expert