We recently paid off our Chase Amazon credit card, and today we got the first bill with the zero balance. Guess what it said our effective annual percentage rate was:
74.09%!!!!!!
I’m not kidding. So we called them right up and closed the account, which was the reason we paid it off anyway, because the month before, they had raised it to 34%.
We also got a bump in the interest rate on our Citicard, to an effective rate of 15%, so we’re going to shut that one off too as soon as we pay it off with a line of credit from the credit union. We’ve never missed a payment on that one in over 10 years. It’s our American Airlines mileage card, and we’re shutting it off. Will they take 2/3s if we offer only that much?
I don’t blame you. Be careful of agreements to pay down cards by a percentage such as 2/3rds. Many of them will report it to the credit rating companies. That can ding your credit.
I know this isn’t popular, but closing an account (or having zero balance which doesn’t report) lowers your FICO score, which other credit issuers monitor, which can lower you limit, which lowers your score, which creditors monitor who can increase your annual rate...
And on and on. It’s a cycle folks have to stay ahead of and know how it works.