[neatdesign]

Originally Posted by singinjeannie

News Flash!!! Credit Card companies are snakes, and when you play with snakes you get bit. Did you know that the CC companies check up on you regularly, and if you're late on someone else's bill, they'll raise your rate??? You don't have to be late on THEIR bill, but on anyone's bill. Send the electric bill a bit late??? Oh, Chase can raise your rate! A bit late on the Mortgage LOC, Capital One is right on your rate hike! Snakes, snakes, snakes.

You're referring to what's known as "universal default". Some credit card companies have this policy, some don't. It's legal for them to do that, because it's all laid out in the fine print of their credit card offers, so that's why they can get away with it. No one seems to be asking our lawmakers why the credit card industry is allowed so much leeway in this area.

Also -- how dumb that FICA scores go down if you close credit cards. Makes no sense financially. If you have fewer cards, you should be a better credit risk, not a greater risk! FICA makes no sense at all.

The problem with the whole credit score thing is that that industry is completely unwilling to explain what makes a credit score good and what damages it. I mean, what's wrong with publishing information that says, "Hey consumers, if you want to have good credit scores you need to do X, Y and Z and quit doing A, B and C." Instead we're just all left out in the cold to sort it out for ourselves, relying on rumor and myth. It's really retarded in my book.

As for the closing accounts thing, that actually does make sense to me. It's one thing to close out accounts, but WHICH accounts? When were they opened? And what are the balances? What are the credit limits?

For instance, I have two credit card accounts. My USAA Mastercard was opened in 1991 when I entered college. It started off with a $500 limit but now is up to $13,500. That currently has a $7300 balance. My MBNA card was only opened in late 2003 and has a $7500 limit and a zero balance (I just transferred it to USAA for a lower rate).

Now, let's imagine the $7300 was actually on the MBNA card and I closed the USAA card. By closing that account, I'm eliminating my oldest account, the longevity of which is indicative of stability, plus I'm losing $13,500 in available credit. That means my $7300 balance goes from taking up 34% of my overall credit limit (more than 20% but still not too bad) to taking up 97% of my overall credit limit (VERY risky).

As it happens, I have my balance on my USAA card because I have a great rate, but even if I had no balance I would still keep the card. I've had it for 14 years -- why get rid of it now?

I received a note in the mail yesterday from MBNA about our credit card and a change. It was in such legaleeze [sp] that I couldn't figure out what the heck they were going to do. I've been in good standing with MBNA also.

I think I got that same change in terms. Luckily for me I work for a credit card company (don't hate me, it's a job!) so I can understand most of it. But I'm in the minority, I believe. Before I started working there I wouldn't have a clue about any of those notices, if I happened to read them at all.

Read through the notice again, and see if it gives you the option of opting out of the change in terms. If so, this usually involves sending in a written notice and stopping any transactions from posting after a specified date. This might be a good option for you if you're simply paying off the balance and don't intend to use the card.

~ Jenney