0% APR Period Over...Cancel Card?

[AhsanDaredia]

Hey all,

It's been exactly one year since I've had a CapitalOne Platinum card which started me off with a $500 limit. A year later, no late payments and paying off balance in full until a month ago where I currently have a $400 balance on it. That's all good but the customer service rep told me as of March 1st my 0% APR period just ended and starting April ill be charged 22%. Now my question is...I don't want to be stuck paying interest because I only use the card strictly for gas. Should I...

A. Pay off $400 full, and cancel? Yes I've heard my credit will take a hit but my other BoA card is over 6 years old so the length of credit is there.

B. Pay off $400 and see if they can replace this card with a Venture card (at least the latter has benefits of miles)

C. Pay off $400, cancel and apply for a completely new card and go with 1 year 0% APR again.

What do you all think? I've only had the card open for a year. Will my credit score take that big of a hit?

Thank you!

[lorraineb]

My question is, why are you carrying a balance on the card at all if you can pay it off in full? Interest rates only matter if you don't pay of the credit card each month and it seems you have the means to do so from your question. If you can't pay off the credit card in full each month, then you shouldn't have that credit card.

[AhsanDaredia]

Well since I started off it was a $500 limit and I kept paying off $200 which I spent on it every month. Six months later they upped my credit limit to $750 so naturally I was behind $250 on the balance even though I wasn't using it. You're right interest rates will only affect me if I don't carry a balance but if I keep my balance $0 and tomorrow they up me to $1000 limit, do you get where I'm trying to get at? It's like if they up my limit I'll always be behind as it is, guess I should just pay it off in full before they do!

[Petunia 100]

Well since I started off it was a $500 limit and I kept paying off $200 which I spent on it every month. Six months later they upped my credit limit to $750 so naturally I was behind $250 on the balance even though I wasn't using it. You're right interest rates will only affect me if I don't carry a balance but if I keep my balance $0 and tomorrow they up me to $1000 limit, do you get where I'm trying to get at? It's like if they up my limit I'll always be behind as it is, guess I should just pay it off in full before they do!

No, I don't see the connection. You make the spending decisions, Capital One does not. Just because they raise your limit does not mean you are required to spend more.

I think if you want to charge day to day purchases (such as gas) and pay in full each month, you should apply for a rewards card.

[Baby_nurse]

No, I don't see the connection. You make the spending decisions, Capital One does not. Just because they raise your limit does not mean you are required to spend more.

Yes, that!

[snafu]

22% interest is very high so it's important to clear your Capital One balance as quickly as possible. [I hope before the interest rate kicks in since interest will be charged from the date of each purchase!] I'd just cut up the card as Capital One seems too difficult for consumers. I've often read very negative comments about Capital One. If using a credit card for 'consumable' items like gas for the car, it's important to pay the entire bill by the due date. It's not smart to pay interest on stuff already used up! I suggest looking for a credit card that give 3% cash back - often 2% for gas in particular. If you hang on to the register slips to add up the bill's total won't be a surprise or more than you can pay. If you set $200. for gas for the month stop charging gas past that total.

Don't use more credit than you can comfortably pay; no matter the credit limit

[AhsanDaredia]

Great, thank you for the replies.

What I'll do is just make the balance 0$, then starting in April whatever amount I use for gasoline or anything else. I will make sure to pay that entire amount off!

[greenskeeper]

you should look for a card that pays you to use it, especially since you are diligent in paying the balance in full each month.

I have a discover card (people will knock discover, but eh, whatever) and they have paid me an average of $400/yr just to use their card in cashback bonuses.

I don't recall off-hand, but i'd guess the interest rate is around 12%....but it doesn't matter a bit because I pay the balance in full each month and collect the cash rewards.

[lorraineb]

As others have said, just because you have a higher limit doesn't mean that you have to use it. If you can't trust yourself, simply ask the credit card company to lower the limit back to what you can afford.

Getting a card that pays you back for these purchases -- some pay 5% back on gas -- makes sense if this is what you are going to be using it for.

[snafu]

Ahsan: I suggest you pay off the balance on Capital One and stop using the card. 22% interest is gouging since savings rate pays less than 1%. Get another CC, with reasonable interest rates and preferably with a cash back feature.

[AhsanDaredia]

Ahsan: I suggest you pay off the balance on Capital One and stop using the card. 22% interest is gouging since savings rate pays less than 1%. Get another CC, with reasonable interest rates and preferably with a cash back feature.

Snafu,

That's exactly what I did! Now the balance is paid off and I'm not using it at all. I will probably apply for another card in a few months. I always wanted to convert this CapitalOne Platinum card into the Ventures but I heard you need really really great credit to go on that card. Let's see what happens down the road! Thanks!

[Rboone]

Your should know close the card because it lower the amount of creditline available to you which can increase debt coverage ratio.... Cut the card up if you cannot manage the urge to use it...