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Author: LadyIanna Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308544  
Subject: Drop one card, open a better one? Date: 8/29/2013 3:21 PM
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What's the best way to do this?

My dad has a Key Bank credit card at 12.99% that charges him a $50 fee every year. He hasn't used it in a few years and it's been at $0 balance all that time. I've contacted them (with his permission) to see if they can lower the interest rate, but they say no.

I'm positive he could get a card at a better interest rate that doesn't charge him an annual fee. Is it better to get the other card first and then drop the Key Bank card, or drop the card and try and get another card after?

There's no point in him paying $50 a year for something he doesn't use. He does have a couple of other cards. One (CAP ONE) has a 9.99% rate the other(CITI) which he gave to my brother to use, (insert long story here) which is at a rate of 0% then goes up to 12.99%. (I advised him _NOT_ to apply for this card and he did it anyway.)


Any thoughts, suggestions?

(I'm guessing you're going to tell me to ditch the whole plan.)
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Author: Patzer Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307242 of 308544
Subject: Re: Drop one card, open a better one? Date: 8/29/2013 4:01 PM
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My dad has a Key Bank credit card at 12.99% that charges him a $50 fee every year. He hasn't used it in a few years and it's been at $0 balance all that time. I've contacted them (with his permission) to see if they can lower the interest rate, but they say no.

If he always pays the balance in full, the interest rate is irrelevant. However, . . .

There's no point in him paying $50 a year for something he doesn't use. He does have a couple of other cards.

That's the heart of the matter. If he really doesn't use the card with the annual fee, he should cancel it to get rid of the fee. If he uses it for purchases, but always pays the bill in full, he should think about whether he can do what he needs to do with another card that doesn't have an annual fee. Absent some really appealing features on the $50 per year card, the answer will be that his other cards are just as good and he should cancel the one with the annual fee.

(I'm guessing you're going to tell me to ditch the whole plan.)

I'm telling you to ditch the plan of negotiating for interest rates on a zero balance. The effective way to negotiate for a zero annual fee is to cancel any card that has a non-zero annual fee* and get some other card that doesn't have a fee. I did that decades ago because of a $12 annual fee, and never looked back.

Patzer

* This assumes the card does not give him other compensation that is of more value than the fee. For example, various people have reported having air miles cards with an annual fee, but getting a companion ticket once per year that saves them more than the cost of the fee.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307243 of 308544
Subject: Re: Drop one card, open a better one? Date: 8/29/2013 6:45 PM
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I'm positive he could get a card at a better interest rate that doesn't charge him an annual fee. Is it better to get the other card first and then drop the Key Bank card, or drop the card and try and get another card after?

Why, if he's not using the Key Bank card, would he be using the new card? Is he going to quit using one of his other cards?

If he wants to get a new card for rewards, a better interest rate (although I'm not sure why that matters since he has no balance on the Key Bank card) or for some other reason, he should go ahead and apply for a new card.

If he wants to drop the Key Bank card because he doesn't want to pay the annual fee, then he should drop that.

Depending on the reported balances on all of his cards, he may want to keep the Key Bank card until he gets the new card, to keep his utilization (utilization = reported balances/available credit) lower, and potentially increase his score. But if his utilization is below 10% even without counting the Key Bank card as available credit, he probably doesn't even have to do that - he could close the Key Bank card at any time.

AJ

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307249 of 308544
Subject: Re: Drop one card, open a better one? Date: 9/20/2013 2:35 PM
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Definitely obtain a new card before dropping an old card. If he's already paid the annual fee for the current card, he's got until the next renewal date to take care of this.

Fuskie
Who would have to have a significant benefit worth more than the annual fee before he would pay one...

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