credit card question

[Michael]

I'd let them close it. That happened to me last year and my credit score dropped 12 points from 840 and then recovered over the next 2 months. I don't know if it was because of the closure or a random fluctuation, or both. With an 828 you are golden and dropping a few points won't impact you, particularly if you're not planning on getting a new mortgage in the next couple of months.

[Bill in NC]

closing an unused card has a negligible effect on your credit score.

the important factors are paying on time and utilization.

[Lux Interior]

testcase wrote:
What is this "interest rate" you speak of?

PS: I do have a loan on my RV that I'm still paying off.

The interest is the amount you are paying above the principal borrowed for the RV loan.

The amount of interest is determined by the interest rate.

Edit: your tax guy may not want you to pay off the loan because you can deduct the interest as a second home.

[Acer]

OK, I just have to furrow my brow on the concept of maintaining debt in order to save on taxes.

If you pay $100 in interest, you'll get $37 back in taxes at the highest bracket, assuming you'll beat the standard deduction. You are still out net $63 compared to paying it off.

Now, if you want to invest the principle in the market, that's another set of numbers (not to mention a risk factor), but just for taxes I can't see it. What am I missing?

[N-OS X-tasy!]

testcase wrote:
Surprisingly, closing an account can (and often does) have a negative impact on your credit score.

I closed a Visa CC account recently that I hadn't used in years -- the closure had zero impact on my credit score. Like wurm, my credit score is above 825.

Perhaps the amount of credit available on the closed account had something to do with it -- the closed account had an approximate $2K limit, while my remaining cards all have limits between $25K and $30K.

[N-OS X-tasy!]

space-time wrote:
[quote=Racer X]
charge something small, then pay it off.

charge something small, then return it.
More trouble than it's worth.

Sears is going down the sh*tter anyways -- let it close.

[wurm]

Yep. My inclination is to just let it close. Credit score be damned!

Thanks, all.

[Lux Interior]

Acer wrote:
What am I missing?

Maybe it was enough to push up from the standard deduction to itemizing?

[PeterW]

And that still only gets you 33% of your money back. Unless the interest rate on the loan is below what the money is currently earning, it’s always better to pay off the loan and have zero interest to deduct.