In November 2008, I got a letter from my oldest credit card, Citi, telling me that it was raising my APR from 7.9% to 18.9%, effective January 1, 2009. I called and asked why they were doing this–I hadn’t missed any payments, I wasn’t late on any payments or negligent in any way. The representative said that I hadn’t done anything wrong and there was no real reason, it’s just what they are doing because the economy had tanked and people are charging more–more demand = higher interest rates for all. Suze Orman had been talking at the time about credit card companies raising rates and said that consumers should defend their responsible histories, and I tried to.
I said no, I’ve been a loyal customer and always pay early and carry a small balance and have a high credit score, so they shouldn’t penalize me. They said, well, we can make you a deal: spend at least $ 3,000 by December 30 and we won’t raise your rate to 18.9% until January 2010–but it will be raised to 18.9% eventually because we can do that. I said that sounds like extorsion and that I absolutely would not accept them raising my rate to a rate that has historically been applied to severely negligent and abusive credit card users. They said, OK, based on your great history, we will only be raising your rate to 12.9%. Out of frustration, I opened a card with my credit union at a fixed 7.9% APR. I’ve used that card as my primary card ever since–it’s still 7.9%. (Thank you, Navy Federal Credit Union.)
So I stopped using the card but kept the account open because it’s my oldest account and I didn’t want to damage my credit score.
I just got a letter from Citi saying, with no advance notice or warning, that my account has been closed due to inactivity and that it will affect my credit score (currently 806, 808, and 813 FICO from the three respective credit agencies). Anyone have any idea how much this is going to lower my score?
I’m going to open a new credit account with a hopefully less predatory bank, but I’d like to know what to expect insofar as how much my credit will suffer. I just paid FICO to check my credit reports and the closed account has not hit yet. I’ve been responsible with my personal finances and have worked pretty hard to cultivate strong credit scores. This really burns me up, as Citi gave me no option to keep the account open or any warning before closing it, and I have read that others’ scores dropped 50-100 points when this happened to them.