OK, I'm one of the lucky ones that received a letter jacking my rate from 24% to 29%. I only have until 11/01 to close the account and keep the current terms, so that's my plan to avoid the additional interest charges. I currently have 3 open revolving accounts (Cap1, Providian, and 1 dept store card) with balances/limits as follows: Providian $2600 / $2700 limit (Opened 8/2000) Cap1 $400 / $500 limit (Opened 12/2001) Dept St. $0 / $200 limit (Opened 10/1997) I also have several other closed revolving tradelines and open installment and mortgage accounts with good history. I don't have the money to pay off Providian so closing that account eliminates most of my revolving credit. My question is: How big of an impact will this have on my score? I'm reluctant to keep the account open since it will cost an additional $10-$15 a month in interest charges, but with current scores in the mid-500's, I hate to take another hit. Any suggestions?
If you close it, you will owe $3000 and have $700 in credit limits. You will owe more than 4 times what your total credit limits are. Scores will tank. Unless you can get another card with an equivalent amount of credit as Prov. I would suck it up till you can pay if off.
I would not close it right now If I were you. I would aggressively pay off that debt and then just keep it open once it is paid off for reporting purposes. Whether its 24% or 29% that is a lot of interest to pay for that card. So my advice to you is to cut up that card and pay off as quickly as possible.
I don't know about TU yet, but after my Providian accounts closed (both with balances), my score was unchanged. Its been about four days on EQ, so I'm pretty sure it would have affected the score already if it were going to. EX went up two points, but I think that had to do with paying off one of my cards. L
Thanks for the responses. I agree that aggressively paying down the debt is the best option but I'm looking at around 18 months payoff best case which is going to cost me an additional $200 or so in interest, plus the continued $59 annual fee. All for a card which I don't plan on using again even if I keep it open. My opinion is that a small decrease in scores would be OK and can be somewhat offset by the removal of several paid collections. I've made good progress over the past 3 months on getting some of those deleted. But anything more than a 20-30 point drop is going to be too drastic and hinder my repair efforts. Whyspers, has your account been reported as closed yet to the CRA's? I would be interested in hearing from anyone else who has closed their Providian account(s) and what kind of effect they noticed on their score.
Do you have several other accts? How much did you owe on your Providian cards as a % of the limits? And, what % were your Providian cards in regards to total credit available? That could be a big reason why scores do or do not drop when accts are closed.
I had two accounts with Providian (both are now reporting as "closed by consumer"). One has a balance of around $1,200 (CL was $1,800) and the other a balance of around $2,100. (CL was $2,900). I do have other tradelines, but because most of them are Cap One accounts, (except for GM Card, Target Visa, Direct Merchants au, Target Retail and Citi) the cl isn't reported on Cap One so my balances are killing my scores. I think you are right that someone with a different portfolio might see a score decrease. I expected on and have been relieved that it has not happened at least yet. L
