YACreditT: Reopening Credit Card Account?

[iamshady]

Last summer I had a Discover Classic Card with a $1000 limit. I canceled this account after 11 months, thinking that less lines of credit would be better. That was really stupid of me since I didn't do the research first and found out later on that keeping lines of credit that are short would actually improve your score. I recently received a letter from Discover asking me to come back with 0% BT for life... my question is if I reopen my account with Discover, how will that be recorded in my credit history and how will that affect my credit score? Will it simply reopen the account I have on file already? I currently have a 714 in all bureaus, and I am looking for a good debt paying solution (hence the 0% BT offer by Discover).

Many thanks in advance!

 

[AEnigmaWI]

if you re-open an existing account, it will add an inquiry to your credit report.. It's not that big a deal, unless you have many inquiries in a short amount of time.

Make sure there are no fees with the balance transfer.. often times there are transaction charges with that type of thing. Also, make sure the 0% is for the life of the balance, and be aware that if you use the card at all while paying it off, your new balances will accrue interest at whatever rate Discover charges you for standard transactions (probably 12-18%). If you have new transactions plus the original transfer, any payments you make will go to pay the lowest interest rate balance first.

The number of lines of credit is not as important as the payment of those lines or the relative balance to limit ratio. Debt to Income ratio is what is often used to calculate creditworthiness.

(yes, i work for a bank)

 

[iamshady]

Thanks for the quick reply!

The Discover deal is the two minimum purchases a month (I could buy stamps or something) and has a transaction fee of 3% with a maximum of $29. As long as you make the minimum purchaes and payments, the 0% APR is for life. Is this worth it, I do plan on working off my debt (around $2000) over a span of half a year of solid commitment.

Should I call Discover and talk to them about reopening my account with the new terms or just send in the invitation letter? In your opinion, is this a good deal?

 

[iamshady]

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