Confusion about credit card..?
2010-03-03 at 12:48 am adminok..i have a citi bank credit card since four years, it has 2400 credit limit which is already gone, so now i am paying 60.00 a month but the payment doesn't go to anything because they are charging me 35.00 finance charge..also they charge 35.00 if i am late and another 35.00 for over the limit ( i don't even use this card) now, my question are..what will happen if a close this account? would i still get finance charges? would my credit score be affected? what would be the best thing for me to do in this situation? ps: serious answers, please
Answer:You got yourself in a credit trap. When you are paying $60 a month on $2400 you won't ever get it paid off. Your interest charges are going to be as much if not more than what you are paying. You can try calling the credit card company and see if you can work out a deal with them, see if they will lower your interest rate. Or you can go to a credit counseling service, go to one that is recognized by your state. They will contact your creditors, and make a payment plan. The downside to this is all of your credit cards will be closed, and they will work a budget out for you, you pay them so much and they pay all your credit cards. The up side is, normally the interest is either waived or lowered considerably, and it is better than bankruptcy. Your third option is to pay more than your minimum, say $100 a month, the extra $40 will go toward the principal (the actual amount you borrowed).
Answer:Closing the account will not in most cases stop the interest from accruing (adding up) They will still add interest and any other charges they can while you carry a balance on this card. If you are close to the limit, or going over it, it is already affecting your credit score. By carrying a balance that is over 30% of what your limit is, you are getting hit every month. If you close the account, it can also impact your credit negatively if it is your oldest card or the only one you have.
Best thing for you to do, is if you can get another credit card with a lower interest rate or even a 0% introductory rate for a period of time, is to apply for that and then do a balance transfer. Then, take the 6 mos or whatever time they give you if you get a 0% intro rate, and pay as much as you can on the balance to get it paid down.
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