credit card limit decreased

[nycdebt]

First time poster here

I recently received $5k in cash and paid down $3,500 on my Bank of America credit card.

3 days later, my CL has been decreased to $500. I've read many horror stories about this company and normally wouldn't mind closing this account down but here's the thing, I've had this card since I was 18. I am now 25 and make decent money ($60k)

Now, my highest credit card limit is a Chase card for $2,700 with a $1k balance on it.

I have a $2K EF and would like to bump this up to 10K by the end of the year while saving money for an IRA account. I will aim to pay off the rest of the Chase card within 3 months.

Should I be closing down this card? Would it negatively effect my credit score since it's my longest running card?

Thanks

[shibabigk]

If there are no annual fees don't close it. It does not hurt you to keep it open and closing it will shorten the length of your history.

[JoshuaHeckathorn]

This is common these days as credit issuers search for ways to reduce risk in their portfolios. I agree with shibabgik, it's never a smart idea to voluntarily close down one of your credit cards if it doesn't have an annual fee, especially if it's your oldest card.

If you do, it will likely further hurt your length of credit history and credit utilization ratio, which together account for almost half of your credit score.

[snafu]

If it bothers you, it might be worth the time and effort to call Customer Service and keep going up the ladder, supervisor to Regional Manager to ask for a higher limit. Tell them you are planning to buy furniture or an expensive piece of Art. If they rather you not use your BOA card... you will comply yadda yadda.

This is the bank that got the gigantic tax payer financed bail out and paid their executives incredible bonuses with YOUr money. Unless you are planning to buy a house/car or some major item soon, I'd cancel BOA and do blogs encouraging everyone else with zero bslsncr to do likewise. That organization does not deserve your support!

[PaydayLoner]

I agree with the others. As long as there's not an annual fee, keep the card, even if it just goes in your sock drawer. The fact that it's your oldest card will keep the average age of your cards higher whether you use it or not.

[red92s]

Ha. $60k income and a $500 limit? That's pretty drastic. I was at a similar income level and age before being laid off, and had a $9k limit with Citi that never went over $2k used. Still at $9k now, for some reason, and I've had a zero balance for months. What's your credit score?

[Mike75]

If the card is not costing you, then keep it with you. But if they are charging anything, then just cancel the card immediately.

[naomibatac]

Yes, I agree with the other to keep the card if there's no annual fee and if not costing you anything anymore if you don't use it. However, I was just wondering if the reason for decreasing your CL is because of your high percentage of CL usage? 3.5k balance on 5k limit? Just wondering!

[Slug]

Keep the card if no annual fee.

Pay off all the other CC debt before adding to the EF.

[AceBarks]

DO NOT close the card. I closed all my cards when I got out myself out of debt about a year and a half ago. I was determined to never use a credit card again.

This year I will make about 100k, and when I went to apply for the Southwest credit card (for the bonus 2 round trip flights) I was denied. I was shocked. I have had to start over with a Capital One card with a $500 limit just to rebuild my credit(score).

Having said that, I don't really NEED the credit. But it was definitely a shock to the ego.

[BMEPhDinCO]

Welcome!

Here are my two cents ...no interest charged ;-)

0. Write out a budget that you can follow! As part of this, splurge and pay the $32-40 to pull your two FICO scores on myfico.com - they will help you by listing all your credit history, as well as giving you a score.

1. Pay off all your CC balances NOW. There is no reason to keep them on - it will not help your credit score, it just takes money out of your pocket.

2. After you are debt free, open a RothIRA and aim to max it out ($5k)

2b. Open a new CC if your score is >720 and you know you won't carry a balance - look for reward cards. If you can't be balance free, look for a good reward debit card.

3. Bump up your EF to 3 months expenses

4. Open other savings accounts for house, car, travel, misc, etc and add to them

5. Re-adjust your budget yearly.