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Re: Does it hurt your credit to sock drawer a card?

Hello TT!  Thanks so very much, this is immensely helpful.  I am really interested in this issue.

 

The stories people are relating about Wells Fargo are the ones I think are most striking.  It sounds like we are getting two cases of WF closing accounts due to inactivity even when (a) the consumer did use the card a number of times and (b) the inactivity period was comparatively short (e.g. 8 months). 

 

That is giving me the impression that WF may be a different animal here (different from other issuers), an impression that is strenthened as I read through the other links you gave.  My comments below.

 


 http://ficoforums.myfico.com/t5/Credit-Cards/Account-closed-due-to-Inactivity-Synchrony/m-p/4319511#...

 

In this case the consumer never used the card even once, and it was closed after more than 12 months of inactivity. 

 

 

 

http://ficoforums.myfico.com/t5/Credit-Cards/What-to-do-HSBC-cancelled-me-b-c-of-inactivity/m-p/1379...

 

Here the cancellation due to inactivity by HSBC is explicable by two things.  (1)  It occurred during an extended time of massive economic panic, where many issuers were looking critically at customers not using their cards -- not during a business as usual period of normal economic placidity.  And more importantly, (2) the person writing in tells us the cancellation (by the issuer) was almost certainly the result of him calling in and having an aggressive call with customer service rep, a call where he told them that unless they made various changes to his card, he planned to cancel it.  He then ruefully observes, "Apparently, they beat me to the punch."

 


 

Keep me posted on anything else you find out.  Please!  The info is gratefully received.  I have a Wells Fargo card so I will watch it a bit more carefully.

 

My general recommendations to people are these:

 

(1) Always make sure that you use any new card at least once in the first three months.  To be even safer, let it generate a real statement and then pay it off after.  Cards that have never been used are vastly more likely to be cancelled due to inactivity.

 

(2) Base your Use-To-Avoid-Cancellation strategy first on how serious it would be to lose that particular card.  For example, if you have a card that is older than all your others by 5+ years, then a strategy that is 99% secure (use it once a year) is probably not good enough.

 

(3) Other major credit cards can be used once a year with no real risk.  Even better might be a bit under 1 year, like 11 months.

 

(4)  Store cards can be used even less often with no real risk.  This is important because to regularly use a store card (even once every 11 months) is much harder to do without buying crap you may not actually need.  Store card issuers know this and are much more fogiving about long periods of inactivity. 

 

(5)  A few reports suggest Wells Fargo may be more punitive than other issuers.  If you have a WF you don't ever want to lose, you might want to use it every six months.

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Re: Does it hurt your credit to sock drawer a card?

[ Edited ]

FWIW it's not that hard even on a bunch of cards to take them out for a milkshake or whatever every 3-6 months.  I do find it a bit irritating though at times.

 

I will typically let them report a balance, but if you're in a FICO optimization phase (which I would argue most people should not be the majority of the time unless they really want zealously manage their credit) you can indeed simply use the card and PIF before the statement date and anecdotally that should be fine... but mostly I just PIF after the statement date personally like the majority of consumers.  Needle in a haystack principle and even on my file the loss of a handful of points on cards with balances reporting isn't a big deal, nor is a temporary utilization spike.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Re: Does it hurt your credit to sock drawer a card?

i was curious so i looked at my alert history on myfico.

 

i see alerts for 3.4, and 5 months inactive becoming active again showing no score change.

 

but i see one time a shell card report a $5 balance where i had a few other cards reporting a small balance.  way less than %9 util overall.  it showed 5 months inactive card being used again and i took a 2 point hit.  i paid it off, and within a week i got the 2 points back.

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Re: Does it hurt your credit to sock drawer a card?

I know Care Credit will close your card on the 13th month if you do not use it. I have had 2 Care Credit cards both I got for an emergency with one of my animals. Got to the Vet who was listed as taking care credit to find out they do not take it. We don't have Rite Aid here so I had no where I could throw something on the card and keep it open. Both times they closed my account for not using it. Funny thing is  you can reapply right after they close the account and they will issue you a brand new account. 

 

Had I thought ahead my son has a Care Credit account he uses at his dentist. I should have offered to use my card to pay for one of his visits so I could keep my account open just incase I ever need it. For now though I have a ton of low interest or interest free for a period cards that would work better for me in an emergency so I have decided not to get another one for now.

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Re: Does it hurt your credit to sock drawer a card?

FWIW I always call in after I open a new account and ask the CSR what their policy is on inactivity. Below are my notes. I recently got accounts at BoA and US Bank and was surprised how short their time was. Maybe they say a shorter time than is actually true to scare people into spending more frequently or keep this is their policy in case they ever need to cancel an account.

Discover: usually 12 to 18 months, typically mail a 30 day warning before closing
American Express: accounts are automatically reviewed after 13 months, if they decide to close it then you get a notification in the mail it is closed but no advanced warning
BoA: 60-90 days
US Bank: 3 months of inactivity they close account, no warning
Citi: 2 years will send 1st warning, if no response another letter 26 months, if no response, at 28 months will set to inactive
FICO 08:708 EQ Bankcard from Citi 12/27/16, 741 EX from AmEx 12/31/16, 736 TU from Disc 12/21/16

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Re: Does it hurt your credit to sock drawer a card?


Adidas wrote:
FWIW I always call in after I open a new account and ask the CSR what their policy is on inactivity. Below are my notes. I recently got accounts at BoA and US Bank and was surprised how short their time was. Maybe they say a shorter time than is actually true to scare people into spending more frequently or keep this is their policy in case they ever need to cancel an account.

Discover: usually 12 to 18 months, typically mail a 30 day warning before closing
American Express: accounts are automatically reviewed after 13 months, if they decide to close it then you get a notification in the mail it is closed but no advanced warning
BoA: 60-90 days
US Bank: 3 months of inactivity they close account, no warning
Citi: 2 years will send 1st warning, if no response another letter 26 months, if no response, at 28 months will set to inactive

Hello Adidas!  Thanks so much for posting the issuer specific info you have collected.  It shows you are being very thoughtful and proactive about your credit, which can ONLY be a good thing.  Three cheers for you, pal!

 

That said, if I were honest I would have to express extreme skepticism about much of what the customer service reps told you.  For example, I am certain that Bank of America does not have a policy of closing cards that have had no activity on them for the last 60-90 days.  That's preposterous.  Many of us here have BOA cards and that has never happened.  I have gone long stretches (well over a year) with no activity on my BOA card with no adverse action.

 

I am also skeptical about trusting those issuers who say they have a policy of contacting you first before they cancel  In general when this happens to people they almost always say they had no warning.

 

You can see my own 5-point recomendations earlier in this thread.  Basically: always use a new card fairly soon after you get it.  Use all other cards at least once every 11 months.  If a card is a Wells Fargo card and it would devastate you to lose it, then use that one every six months.  End of story. 

 

I am basing this on having actually solicited many time in the Forums for stories of cards being cancelled due to inactivity.  In virtually every case it was either a card that had never been used or a card that was unused for at least 12 months.  And often the cancellation did not happen till much later than month 13.  Many people additionally volunteered case studies of cards that were not used for years with no adverse action (store cards were a bit more common here but major cards too).

 

Thanks again for your post.  My advice (for whatever it is worth) is to avoid having a different approach for each issuer (with the the tiny Wells Fargo caveat).  Just have a simple policy for yourself like: every six months for all cards.  (And trust that if you occasionally don't pull them out till month 7 or 8 that is still fine.)

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Re: Does it hurt your credit to sock drawer a card?

[ Edited ]

It depends.  

If you're paying an annual fee on your card, it will never be canceled.

Amex for example.   I have two accounts.   One has been dormant for years, but because I pay an annual fee for the charge card, they leave my dormant account open.

I'm sure the same thing goes for most banks.

I know I've gone over 18 months with BofA dormant and they didn't touch my account.

Your credit score in TSYS becomes a post-selection factor as well as your "number of other accounts" with the bank [x] after the batch program that scans for dormant accounts selects it for closing.

 

The worst thing about sock-drawering a card (and I do it too) is that if you ever take it out of the drawer to use it, you can pretty much guarantee your second purchase will be declined.

 

If they do close your account, there are two things to worry about.   Your total available credit will decrease by the amount of your credit line and could negatively impact your credit score.   If you have a balance on the account and they close it,  it looks (and scores) even worse.  

Also,  it will show "Account Closed by Credit Grantor" instead of "Account Closed at Consumer Request"  

If a person is reviewing your credit and not a computer,  it would surely raise a red flag to a loan officer.

 

 

 

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Re: Does it hurt your credit to sock drawer a card?


annalog wrote:

The worst thing about sock-drawering a card (and I do it too) is that if you ever take it out of the drawer to use it, you can pretty much guarantee your second purchase will be declined.


 

 


I disagree with this and think it's a very generalized statement.  There are way too many variables to consider when making this blanket statement above.  Just two of them would be the creditor and the length of time.  I've never run into this issue referenced above with SD cards, nor do I know anyone personally that has either.

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