[erkyl]

That hasn’t been the case for us. We actually received a notice from our insurance company that said our insurance rates were going UP because of our credit risk due to zero balance/open credit accounts. I think they look at all that potential credit card debt as a risk, as would other lenders. We’ve closed lots of accounts we used for zero balance debt reduction offers, paid off, then closed. Other accounts have been closed by them for inactivity. I’m sorry, but that Amazon card sticking us for an annual effective percentage rate of 74% tells me they want us gone. Maybe we’ll just payoff the CitiAA card and leave it open, but stop using it. But then, we’ve said we were doing that before, and kept using it anyway. I think a good old savings account for emergencies and our debit card is the way I want to go. I’m sick of credit card debt and these guys are just going to keep getting worse until the law changes next year to regulate them.

[D-fendr]

I'd have to see more about the insurance company notice. Your credit score IS the measure of risk insurance companies use - along with everybody else. So it would be important in this case to see what happened to your scores.

Bear in mind that a zero balance does not report on FICO (the credit scoring model). So, for example, a one dollar balance with a 100 dollar limit increases your score more than a 0 dollar balance on the same account. Further, if you don't have any balances on any revolving accounts, that impacts your score negatively.

I agree with you that 74% is ridiculous. And you are exactly correct in thinking they don't want you to keep it. I can't speak for Amazon on this one, but what is going on is credit card companies are decreasing their exposure - canceling inactive accounts/lowering limits and raising their fees.

This is their business and what they think they need to do at this time. The point I'm making is that these actions results in a much lower credit score for a great many folks - unless they know what to do.

Credit scores impact our lives in a lot of ways other than borrowing - and we never know when we might want to borrow or when borrowing will be the wisest financial option.

I truly understand your points here, and I agree with the sentiment. What's at stake with your score in the near term is losing long positive history. If some of your cards you close are seven, ten, twenty years old.. you can't get that back helping your credit score for a very long time.

Here's a really brief ABC news radio story about Should I cut up my credit cards. It gives the basics anyway.

Thanks for your reply.