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Author: rael4mozo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308722  
Subject: New CC Account Date: 3/15/2006 4:18 PM
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Howdy all,

About two weeks ago I had to do some spring shopping for shirts and slacks. I went the store where I had a $25 gift card (eddie bauer), and picked out about $250 in clothes. Keep in mind, this is a large purchase for me, as I like to buy my summer clothes in the fall, and my winter clothes in the spring (think SALEs!).

At the checkout, I was asked if I wanted to save the preverbial 10% by opening a charge account. In a moment of weekness, I said yes, as I figured I never, ever say yes to these offers (until now). My FICO is 750+, and I only use my two AMEX cards (one personal, one business) and the occasional VISA through my credit union with a 9.9% rate.

Got my card, and after I read the agreement, I remembered why I never say yes. 24.80% interest rate! In the agreement, it also states "the corresponding annual percentage rate will never decrease below 22.8% nor increase above 24.99%" Such a deal.

Obviously, I intend to pay the balance off before the bill even arrives. My question here is, should I then tear up the card, cancel it, or just stick it in the drawer for a while. While I do intend to shop there again, I won't likely use the card again. I use the AMEX's for the reward points anyhow.

Thoughts? Was I a Fool or just another fool.....

R4M
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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223635 of 308722
Subject: Re: New CC Account Date: 3/15/2006 4:22 PM
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Got my card, and after I read the agreement, I remembered why I never say yes. 24.80% interest rate! In the agreement, it also states "the corresponding annual percentage rate will never decrease below 22.8% nor increase above 24.99%" Such a deal.


If you always pay off the balance, then the interest rate is irrelevant.

Obviously, I intend to pay the balance off before the bill even arrives. My question here is, should I then tear up the card, cancel it, or just stick it in the drawer for a while. While I do intend to shop there again, I won't likely use the card again. I use the AMEX's for the reward points anyhow.


Why would you pay it off before the bill arrives? There's no interest on it, so this makes no sense to me. Just pay the bill in full when it arrives like you intended anyhow.

If you always pay your card in full and you shop regularly at this store, I think I'd keep the card because most stores with store cards run specials if you use the card to make a purchase and they send special coupons and deals out regularly. That is the only reason that I keep any store cards though I almost never charge to them because I prefer my AMEX Blue Cash card.

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Author: Milligram46 Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223641 of 308722
Subject: Re: New CC Account Date: 3/15/2006 4:31 PM
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NO! Don't cancel the card UNLESS (read on) - this is where folks get burned. If there is an annual fee attached to the card then yes, close it out but otherwise...

...let it sit for 8 to 12 months. After six months of inactivity it doesn't count on FICO scoring anyway under changes made about six months ago (that is if it's positive, if its negative then yes it sure does count). Opening and then turning around and closing is a "red flag," and there have been a number of media stories about consumers who had A+ credit and chipped away at their credit score by doing this very tactic over and over again and actually pushing themselves into a "bad" credit score despite having excellent credit and only chasing after those 10% at the register offers. One time of doing this is not going to give you a 600 FICO score - not even implying that.

See here is the rub, at 740+ the world is your oyster. You're at 750+, if you take the maximum hit of about 25 points for opening a new credit line and then closed by consumer - it could push you below that AAA ration to AAA-. The impact is minimal in the big scheme of things but poop does happen, and a 740 score is worth defending. Sitting in front of a mortgage broker the difference between a 735 and a 755 is about 1/4% of interest!

No earthly idea how this will impact or if it does Vantage. So lesson learned, you know better, pay it off, put it in a drawer where no bad guys can find it, watch to make sure there is no illegal activity, shut it down in 8 to 12 months.

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Author: lanshark Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223748 of 308722
Subject: Re: New CC Account Date: 3/16/2006 11:07 AM
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R4M,

As much as I love my own AmEx Blue Cash, I keep several cards around, Eddie Bauer, being one of them. The reason is this - as a cardholder they'll send you coupons and sales flyers. Quite often it's tied to the use of their card, but the discount far exceeds the rebate from AmEx. When the bill arrives from WFNNB, an electronic payment is scheduled and that's that. As long as there's a grace period, they can charge 5-zillion percent interest. :)

- Lan

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223779 of 308722
Subject: Re: New CC Account Date: 3/16/2006 2:19 PM
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rael4mozo,

You wrote, Thoughts? Was I a Fool or just another fool.....

I have Kohls and Mervyn's cards because of the periodic discounts. I also have a pretty decent FICO. I figure having the cards is worthwhile, even if they cost me a few points on my score. After all, if having a good FICO score doesn't earn or save me money, what good is it?

- Joel

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Author: rael4mozo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223808 of 308722
Subject: Re: New CC Account Date: 3/16/2006 6:37 PM
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My wife has a Kohls/Target for the sales, but when I bought stuff online through EB a year or so ago I began getting email offers and a catalog from them, but I'll just pay the full balance off and keep the card handy just in case they really throw a great sale my way.

FWIW, AMEX did help me with a small business loan when I started out, so I do have a sense of loyalty for them. My American Express financial planner, however, was as clueless as could be. Needless to say I have since left that part of the company long ago.

Thanks to all.

R4M (who will not sign up for any special offers soon unless it has to do with happy hour this Friday...)

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