A while back when all of the credit cards started raising their interest rates, I received one of the notices that everyone else got that my rate was going up. I immediately called my credit card company to tell them I did not accept the change and to cancel the card, I additionally expressed my dissatisfaction with their company for the change.
However, I was a little more naive back then, and they convinced me to leave the card open or it would damage my credit by closing it. In exchange, they offered to keep me at my same rate, so long as I didn’t use the card anymore and instead kept it open without a balance. I worked hard to pay it off and didn’t add any additional charges.
Eventually I had an emergency, and decided to use the card only for emergencies. I made the mistake of assuming that since I had paid it off, they wouldn’t raise my rate, but of course I didn’t check into that. Of course the rate did raise to 23% once I used the card, and I continued to use it as emergencies kept popping up, and within a year I had put over $7,000 on the card. Now I am still working to pay it off and have already wasted $1000 in interest.
Submitted by: Ricki
I can understand not wanting to close an old credit card and damaging your credit history, since most of the credit bureaus look at length of history as well. But at the same time, if you do not have the discipline to handle your credit cards and prevent yourself from getting into debt you can’t pay off, then it’s not worth it in my opinion to keep it open.
Many people joking tell you to “freeze your assets”, or essentially put your card in a big block of ice and keep it in your freezer so you have to wait a long while before you can use it. This method is supposed to give you time to think through the transactions and possibly talk yourself out of it. While this is a beneficial method, even then it is not fool-proof.
I truly believe some people just can’t handle credit. Credit cards are not emergency funds, a separate savings account with $1000 or 6 months worth of expenses saved up is an emergency fund. The extra interest that this person paid on her debt could easily have been a suitable emergency fund to get them started.
As far as credit card companies go, I never trust them, they are out to make money, not be humanitarian.
Amount Flushed Down the Money Drain: $1,000