Credit Cards Cancelled for Non-Use!!!

[Dick Strauss]

I just wanted to warn folks that the CC companies are cancelling cards specifically for non-use. They didn't give me a warning saying "we're going to cancel your card if you don't use it more". Chase informed me that they cancelled my account even though I've had this card for over 15 years and have used it hundreds of times (though, to be fair, I haven't used it much in the last few years). I suppose they are doing this so that they have less outstanding available credit to make their balance sheets look better for the government and shareholders.

I did speak with an agent on the phone but the account had already been closed and could not be re-activated. I was very calm and pleasant with the agent because he hadn't made the decision personally. I explained to him that I've done business with Chase for so long I didn't consider it to be a good business decision on their part. I also told him I won't be doing business with Chase in the future!

Cancelling your card (either by you or them) can also adversely affect your credit scores. Let me explain... one of the components of your score is the ratio of (credit utilized or debt)/(credit available). When the card is cancelled all of the sudden your credit available drops quite a bit making it look like you are utilizing more of your available credit (as a percentage). As an example, say you have two cards with $3k credit lines on each and you owe $1k. This means you currently use only 17% of your available credit. If one card gets cancelled, you now have used 33% of your available credit resulting in a reduced credit score.

So, if you have a card that you haven't used in a while, use it ASAP if you don't want this to happen to you.

[Michael Poller]

I got a call from Amex that they reduced my credit limit. :mad:

For sure not due to any negative activity on my part, aside from not using it too frequently except for large purchases, and paying it off quickly if not all at once every month. :eek:

This is what you get for paying off your debts on time instead of paying the minimum balances all the time.

How the heck did we get so backwards that those that do right get wronged and those that do wrong get helped? :confused:

[Chuck Wintle]

I have a new card from last August that has yet to be used. Probably going to get canceled at this rate. :D

[James Stokes]

Yes, I have half a dozen that I never use.

[Eric Roberge]

In order to build your credit score you need to have some revolving credit too. My wife worked in that industry for a long time and we were talking the other day about how the rules have changed. (One of my cards was just lowered too.)

Dick, you're right! With inactivity and them cancelling or lowering your available credit, it can negativity impact your credit rating.
Sucks for those of us that don't want to pay interest and pay the thing off each month. Now we have to let it revolve:mad: (at least a little)
It's in their bylaws though, they pay $ to have you in their system (processing fee), They can even charge you an inactivity fee.

It's all business...:)

[Lee DeRaud]

BofA/Visa reduced my limit a couple weeks back. I guess it's ok since it's still insanely high: they've been bumping it up for years with no prompting from me. (I only use it for places that won't take the 'cash-back' Amex.)

The annoying part of the whole process were the weasel-words in the form letter that made it sound like they had seen something in my credit report that triggered the action. So I wasted some time getting a fresh one (naturally it wasn't the one I normally get regularly), only to find that the only change from last year was one credit check...from BofA the previous week.

[Chris Padilla]

Hold on hold on hold on. While I can see the argument about cancelling some credit cards or lowering your available credit can affect the (credit utilized or debt)/(credit available) ratio, that isn't the only criteria they go by. Lowering your access to too much credit can also be a good thing to have on your account. In fact, I've gone and lowered my access to credit over the years. It seemed every 6 months, various outfits would increase my access to credit and it got to be too much and so I started hacking it back down to more reasonable levels.

Now as far as cancelling unused cards, you would think they would try to let you know ahead of time because that could be VERY BAD if you need to use one in an emergency. I would be PO'ed beyond comprehension!!

All that said, I don't keep cards I don't use so I can't imagine it would be a factor. Further, some cards I get just to use for their promotional packages and them dump them later. Now I "heard" this can adversely affect one's score but I do this all the time and have never had any problems with my credit score. But, everyone's score is different and we all have various items in them counted in various ways so who knows....

[Cliff Rohrabacher]

I have one card: AMEX. My FICO is in the mid to high seven hundreds.

You don't need to have the three cards with some meaningful percentage of balance on them . That may be a factor but, clearly it's not the only one or a major one.

[Brent Leonard]

I have/had a no preset limit (just like AMEX) on my chase card that I use for work associated travel. They just informed me that I would no longer have "no limit" as I never charged beyond the "secret limit"!!??!!

After a little research, I've found that the "no preset limit" cards are in fact detremental to your FICO scores. Not by alot, but a negative factor for sure. Here is why,

Just as was stated, your FICO score is evaluated by, among many other factors, your balance opposed to available credit on revolving accounts. On your credit report on any given month, an AMEX card will show the "limit" of credit as the same as the current balance (amount owed) on the card. Even though the balance must be and will be paid off at the end of the month, it appears as though your card is maxed out. Several years ago when I had AMEX, and watching my credit reports closely (a little identity theft problem I had), I noticed what I just described. It never dawned on me that such a thing was actually hurting my score ever so slightly.

How much does it hurt an otherwise good "borrower"? I doubt enough to notice or really matter in the scheme of things. I find it funny though, a person who borrows very little and is VERY financially stable with good income, is sometimes deemed MORE a risk to lenders than a "GOOD BORROWER" with less real assests.

[Mark Versprille]

Don't get me started with Chase. I hate Chase.

What's got me going now is College Financial Aid. We just enrolled our daughter at Rutgers. Of course we applied for financial aid. We thought our credit score would help. We have paid all our bills on time. Saved regularly and lived within our means. Rutgers said we qualified for a $4,000 student loan.
The parents of one of my daughters friends earn considerably more than we do. But the parents have two new cars each, both of their kids have new cars, their credit card debt is over $100K (according to their daughter) and they live in a McMansion on over an acre plot in Hunterdon County NJ. They qualified for an $18,000 grant because of their debt to earnings ratio,

[Jeffrey Makiel]

The parents of one of my daughters friends earn considerably more than we do. But the parents have two new cars each, both of their kids have new cars, their credit card debt is over $100K (according to their daughter) and they live in a McMansion on over an acre plot in Hunterdon County NJ. They qualified for an $18,000 grant because of their debt to earnings ratio,

I was hoping that a deep recession would recalibrate the financial system and bring back personal responsibility. Silly me.

-Jeff :)

[Ken Fitzgerald]

I believe what you are seeing is the CC companies is reinstating some tighter credit boundaries. Some of the stuff they have pulled in the past bordered on being criminal IMHO.

[Pat O'malley]

I agree with Cliff, I have one card (Visa) that always has a zero balance, and LOML has two always at zero, both of us in the low 800s with the three credit agencys

[Frank Hagan]

I think Ken probably has it right ... they are scaling back on the loose standards they had in the past.

I remember years ago, back in the '80's, wondering why we would not get a credit card if we applied for it by picking up one of those brochures, but would get one if we responded to a bulk mail offer. From the same company. At that time, they had certain ratios they would accept from each avenue of promotion. So the same applicant could be refused, or accepted, depending on how the identical offer was presented to him.

For years, we have had one card with both our names, and then a card for each of us as the primary. Three total, never carry a balance, never pay a fee. They may jettison us too!

[James Stokes]

The credit card companies do not make sense to me. I actually have 10 credit cards. One has a balance on it with a 7% rate for the life of the loan. That credit card is in a drawer and I put nothing else on it. About 5 of the other cards I switch off on using, but I pay them off every month and I never keep a balance. Ocaisionally I may take 2 months to pay one off but only if it is a large purchase. They have all raised my credit balance over the years, I currently have a combined credit limit around $250,000 with these cards. No one needs a credit limit that high. I recently had one card raise my interest rate to 31% I cancelled that card immediatly. I have also had 2 of the cards lower my limit some but they were cards that had a $50,000 & $30,000 credit limit but they only lowered them by a couple thousand each. It made no difference to me I would never put that much on a credit card anyway. Well one of them I did pretty much max out because a bank loan was taking to long and I would have missed a good deal if I had not, but as soon as the bank loan came through I paid it off. I have never been late on a payment in my life. My credit score is around 840 and most purchases I make I pay cash for.

[Belinda Barfield]

Don't get me started on Chase either!

I was listening to Clark Howard a couple of months back and one of his callers had also had a credit card cancelled for non use. Clark's suggestion was this, particularly now when CC companies are taking such drastic measures, is to use your card(s) once or twice every couple of months and pay them off immediately. The purchase doesn't have to be a large one, a burger and fries will suffice.