We recently received a notice of some changes in terms that our credit card company (let’s call them Arms ‘N’ Legs Financial) has made to our account. Their letter states that if we don’t want to continue as cardholders under these new conditions, we need to notify them before their effective date, at which point our account will be closed by them.
We aren’t a profitable customer for Arms ‘N’ Legs since we don’t carry a balance. Last year they got a little peeved and decreased our credit line because of “underuse,” which didn’t really bother us since they had increased it of their own volition in the first place. Anyway, this is the only credit card we have, and we do like to have one for online purchases and emergency video game purchases. My question for all of you financially savvy Dopers out there is this: Will it matter whether we just cancel the card versus having the credit card company cancel us? Does one look worse on a credit report than the other?
As a bonus question, is it better if we attempt to get another card before canceling this one or being canceled by them?
I don’t think it matters who closes it. The main reason closing a credit line can look bad is that it decreases your total available credit and therefore your used credit to total available credit ratio. If you go from 10% utility to 50% utility that could work against you. Which means that it doesn’t matter who closes the account.
Thanks, all. I kind of thought it would be best to close it ourselves and to make sure it shows up that way on the credit report. I think we’ll look for a better deal and then cancel the A ‘N’ L account after we’ve found another card. (Just one, zoltar7. We’ve been to the “several credit cards” place in our youths and learned just how much trouble that can get us into :eek:.)
I’ve done both and neither affected my credit rating. In both instances, they were cancelled because I wasn’t using them. One was just cancelled by the card company 6 months ago and I’m buying a house right now and my loan company never even mentioned it. YMMV.
You didn’t say what the changes are. Because of the new law, most credit card companies are changing terms in order to get it in before the law goes into effect, so your new card might be no better.
I don’t know the terms of this one, but if you do want to get another you might check out the no annual fee cashback cards. I have no idea of the interest rates, because they are guaranteed too high, which is why we pay on time and carry no balance. You can make money on cards if you play them right.
Keep the card open and don’t use it. Best for your credit score and although there might be anecdotal evidence from others that closing a card didn’t affect them, the reality in the scoring business is that is VERY likely to affect your score negatively (less credit avail increases ratios).
The act in question that ensures you have access to one free credit report per year from the national credit reporting agencies (NCRAs) is the Fair and Accurate Credit Transactions Act (FACT Act).