Hi, When I opened my first credit card, I had not credit history at all. Therefore, I had to open a SECURE credit card, at HSBC. Of course, there were disadvantages: - $1,000 locked in an account. - High APR - Annual fees. Today my credit score went up, and I was able to open a new, regular, credit card at Providian. So I though, it's noe time to close my Secure credit card and get my 1000 bucks back! (yoopee) But then I read on a website that one should "NOT CLOSE YOUR FIRST CREDIT CARD", as it could drop the credit score importantly. Ouch! I asked HSBC if I could just convert my Secured account into a regular account, they said "no way". They said they can give me my money back only 45 days after I close my account. So here I am, with $1000 frozen, annual fees on a credit card I don't need anymore. But the fear that I'd go back to a low credit score if I let it go. What do you think? What should I do? Thanks! Nathan
Do you have a copy of the original contract you made with that bank for the secured card? IF you don't have a copy of the original contract tell them to send by mail or fax written proof, that they have retained the rights to hold your money for 45 days after you have closed your account. It may be in the contract.....check.
Yes I have the contract here and yes... It says they keep the anount for 45 days. But I guess the problem is not really for "how long". My question is whether or not I should close this account. Will my credit score really drop? Is it worth keeping the card?
My personal opinion is to close the secured account and move on to unsecured credit cards. You want to establish a good payment history with the unsecured card and that will happen in just a few months. By that I mean, you could charge one pair of socks for six months on the unsecured account, pay the bill in full each month and continue that pattern. It's a matter of low utilization and good payment history. Debt-free and good payment history will have people clamoring for your business.
I already did open a unsecured account, and I'm using it on an everyday basis, always paying on time, full balance. So you think it's time I close my old secure account? It won't make my credit score drop?
You should be just fine. I'd close the secure account, get that $1,000, and save it for the proverbial "rainy day." Invest it. Put it in a ING savings account and reap the rewarks of compound interest. You've earned your money in more ways than one. Keep up the good history by paying your bill in full every month.
How old is your HSBC secured account? And what was HSBC's reason for not not unsecuring it? In most cases it takes 6 months to a year of on time payments before unsecuring your card will be considered. Depending on how old your credit record is, and the number of accounts you have, closing your secured card could cause a significant score drop. If there is a chance that it could be converted to a unsecured account later on, I would keep the account open.
