What should I do with this credit card?

Question

I was hoping some people could help me decide on this.

I have a credit card with Citi, and when I signed up with it, it was a student card for people who have less than two years of credit. Anyways, the Standard Purchase APR is a ridiculous 28.990%! Well, I paid it all off, and now I want to cancel the card because I refuse to use it anymore with an APR that ridiculous. The only reason I got it was because I had hardly any credit history. However, everyone in my family says that you should never cancel a credit card, to just keep it, even if you don't use it. It would just be a hassle to keep it, but why do they say you should keep it? Should I go ahead and delete it, and if I do, what consequences would it have? (They said it ruins your credit score, which doesn't make sense to me.) If anyone can explain all this mumbo-jumbo to me, I'd appreciate it. Thanks.

Answer 1

Hang onto it, and don't use it.  At least until you get a card with a more reasonable rate. Unless it's costing you an annual fee, there's no harm in holding onto a card you don't plan on using for a while.

It has to do with your credit to debt ratio.  By closing the card, you are reducing you available credit spending. If you have debt on another load or card, your ratio takes a hit. If you have no other debt, then still hang onto it to maintain a credit history. Just don't use it except as noted, when you can immediately pay it off.

When you get a better more reasonable card, negotiate.  Once a year, I go through my credit cards and call them all up and negotiate interest rates and or credit limits.

Don't tell them you are negotiating though. Tell them you are going to cancel the card to get a better deal elsewhere, and mean it. Be prepared to actually cancel the account if they can't make an interest offer of a better rate for a customer in good standing. If you have an annual fee, negotiate that too.  

Answer 2

Credit scoring can be done in many ways, and like buying an airline ticket, there is no one who can really tell you when is the best time to do what you have to do.

Since you have no balance, it is probably best to retain the card and do not use it.  Or if you fell you must use it, do so and pay it off right away.

Wait until you have other cards that are more reasonable before you close the account in this one, and when you do close it, do so by writing a busines like letter to them.

Answer 3

The reason they say not to cancel a card is becasue it may look a little funny on your credit and affect your credit score.  Before you cancel the card,  contact customer service and say, look this interest rate is absolutely absurd and I am ready to cancel this card unless you can do something about it.  If they say they can not ask for a supervisor.

if you get the rate down only use the card for ONE purchase a month, something already in your budget and pay it off after the charge hits.... like your nails, gas...something you already pay for.  That will keep the card active and show a payment history.

I had a friend that used to work for CITI credit cards, he said and I quote "Citigroup is the d**n devil"