What to do with Credit Card?
Asked by
IDunno (
1
)
July 30th, 2009
I have a CapitalOne card that I’ve opened a little over 2-years ago. Ever since, I’ve been paying off the balance in full. However, I received this card as a method of re-establishing my credit (crazy college youth, you understand); so naturally I started out with a low credit line and this card comes with a $19 annual fee.
But since then, with excellent payment history, my credit scores have gone up considerably.
I’ve managed to get another credit card with the same credit line and no annual fee. And I also pay in full on this new card as well.
So here’s the question. What advice should I do about the annual fee?
I understand if I close this card out, I’m going to hurt my credit score because it’s a 2-year old card – the first actually since my way onto a good credit rating. If I don’t close the card out, I’m faced with paying $19/year. CapitalOne won’t waive the fee. They offer me to apply for a non-annual fee card (which I’ll probably be approved for).
Any suggestions? Thanks in advance.
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15 Answers
Closing a fully-paid card hurts your credit score? I didn’t know that. Anyone know why?
Just keep it at a zero balance, and don’t renew next year. There will be no penalty.
What do you mean don’t renew it next year? It’s a credit card and the only way it will end is to close the card or wait to have capitalone close it for whatever reason they chose.
Tell them you are unwilling to pay the fee. The fee is what makes it renewable.
okay, already asked them to waive the fee. they say no. only alternative is to close the card. but closing lines of credit that longer history impacts credit score negatively.
Don’t ask them to waive the fee, tell them you are unwilling to pay the fee. That will result in a penalty-free closure of your account.
It isn’t considered a “black mark” to cancel an account, but doing so can undo some of the benefit that account has had on your credit score.
One of the biggest factors in determining credit score is the ratio of balances to limits on your card accounts. The greater the ratio, the better. In other words, if you’re carrying a balance that’s close to the limit, that hurts; a balance that’s far from the limit looks good. When you delete the account, the ratio of that card disappears from the calculation.
Another factor is the length of history associated with that account. It looks good to have an account with a long history. After you close an account, its history will continue to appear for awhile, no more than 10 years and often less. So again, that favorable factor is eventually lost.
In your situation, this was a low-limit card, so the balance/limit ratio wasn’t huge and your new card will give you the same ratio anyway, so nothing lost there. What you will lose eventually is that 2 year history.
I closed my Capital One because they wanted to give me fees when I never even used the card. I hate CapitalOne.
I’d close it .
Wait until you’re closer to the membership renewal date, and then call them and ask for your account to be converted to a no annual fee account.
If they refuse/say they can’t, then insist they close it at cardmember’s request, and make sure they send you a letter of confirmation for your records.
Although your score will dip a little, it won’t be significant. Inactivity on an account for a long period of time has about the same effect, so it’s really no big deal. It will still be listed as a satisfactory credit reference on your credit report for the next few years.
I would run away from Capital One as fast as possible, even if it costs to do it. And make damn sure to have it all in writing.
It wont hurt your credit score that much if any. Call them, tell then if they cant remove the fee you will cancel. If they wont, kill the card.
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