topic Re: Credit card Inactivity in Credit Cards

Credit card Inactivity

Anonymous — Sun, 03 May 2020 19:43:48 GMT

I've read a few threads about certain banks closing inactive accounts.

It happened to me today. My Citibank was closed due to inactivity and info from my credit report. Too many inquiries and high credit utilization. Trying to lower my balances.

How common is this and does every bank do it?

What impact does this have on my FICO?

Is there some sort of a time line for how long you can go inactive with which bank before expecting them to close?

There are a few cards that I opened long time ago that don't really intend to use anymore. For example, Amex, Barclay, and Capital one.

Re: Credit card Inactivity

AverageJoesCredit — Sun, 03 May 2020 19:50:01 GMT

How long did you not use the card and what card was closed?

Re: Credit card Inactivity

Anonymous — Sun, 03 May 2020 19:50:52 GMT

@Anonymous wrote:
Will banks close inactive accounts?

I've read a few threads about certain banks closing inactive accounts.

It happened to me today. My Citibank was closed due to inactivity and info from my credit report. Too many inquiries and high credit utilization. Trying to lower my balances.

How common is this and does every bank do it?

It varies, but with everything going on these days many banks are tightening up to limit exposure and risk.

What impact does this have on my FICO?

It depends. If you have significant overall utilization, and you lose a line of credit, your utilization percentage will increase as it's being weighed against a smaller total credit line.

Is there some sort of a time line for how long you can go inactive with which bank before expecting them to close?

In general you should use any card you plan to keep at least every four to six months but you may want to increase that while the pandemic is happening.

There are a few cards that I opened long time ago that don't really intend to use anymore. For example, Amex, Barclay, and Capital one.

Look into a product change for these - maybe you can change them to a different card whose rewards serve you better. If I were you I would use those cards and keep them open for now at least. You said high utilization was an issue so losing those cards is going to drive it up further. That will hurt you further. If it were me, I'd buy a few things with those cards to show activity. Once your closure hits your reports, other lenders may consider following suit.

Re: Credit card Inactivity

Anonymous — Sun, 03 May 2020 20:12:07 GMT

More than 12 months.

Re: Credit card Inactivity

wasCB14 — Sun, 03 May 2020 20:16:45 GMT

@Anonymous wrote:
More than 12 months.

Possibly 24 months? Even before covid, there were many cases of Citi cards closing after 24 months of inactivity.

Re: Credit card Inactivity

Anonymous — Sun, 03 May 2020 20:30:28 GMT

Good to know. My FICO is 712 and worried it will lower more.

I do have couple Amex cards that I don't use. Is it recommended to charge a little amount just to keep them open?

Re: Credit card Inactivity

wasCB14 — Sun, 03 May 2020 20:43:46 GMT

@Anonymous wrote:
Good to know. My FICO is 712 and worried it will lower more.

I do have couple Amex cards that I don't use. Is it recommended to charge a little amount just to keep them open?

There are anecdotes of Amex cards remaining open for many years without activity, but policies can always change. If you really want to keep a card open, use it.

You mentioned Barclays. They have sometimes closed accounts after as little as 6 months of inactivity. YMMV.

Keep in mind that while you might want to keep one old account open (or two, in case the first one closes), you don't need to keep absolutely every old account open to show you have a long history.

Re: Credit card Inactivity

Anonymous — Sun, 03 May 2020 22:11:34 GMT

Sorry for the loss of your card. What I do to maintain activity is use some of my lesser cards for recurring charges. Two cards are used for my streaming channels, cell phone on another, Wi-Fi on another card, and gas/electric on another. Now and then I air out the above cards and charge something. Pizza on a Friday, lunch at McD's. A couple of the somewhat better cards are also used for property taxes twice a year and auto insurance twice a year. That way they still receive some decent spend. Keeps the CCC happy.

Re: Credit card Inactivity

Anonymous — Mon, 04 May 2020 17:02:04 GMT

@wasCB14 wrote:
@Anonymous wrote:
Good to know. My FICO is 712 and worried it will lower more.

I do have couple Amex cards that I don't use. Is it recommended to charge a little amount just to keep them open?
There are anecdotes of Amex cards remaining open for many years without activity, but policies can always change. If you really want to keep a card open, use it.

You mentioned Barclays. They have sometimes closed accounts after as little as 6 months of inactivity. YMMV.

Keep in mind that while you might want to keep one old account open (or two, in case the first one closes), you don't need to keep absolutely every old account open to show you have a long history.

Right. Now if utilization is currently an issue, it may make sense to work to keep them all open, if they have useful CLs. But in general, if it's very easy not to use a card for months, that card probably isn't needed, and can be closed (by you or them) when utilization or whatever is under control

Re: Credit card Inactivity

Gonzozap — Mon, 04 May 2020 19:36:45 GMT

I keep a spreadsheet with all my cards and the date last used. I make a point of using the dormant ones at least once every 9 months, even if I just buy something and return it.

Re: Credit card Inactivity

pete19103 — Mon, 04 May 2020 21:22:33 GMT

With everything going on now, its probably be much easier to try to keep the old cards open by using them occassionally than trying to get new ones down the line. If I need to get cards some usage, I find a bill like my cell phone or insurance bill and charge small amounts to several cards to pay that bill off. For ex: I will charge $10 to 5 different cards to pay off my $50 cell phone bill. Do this every month or every other month and you should be good. Dont forget to set up auto pay for those cards so you dont forget about them and miss a payment.

PC them if you wish to get a different card that works better for you but I would charge something on them ASAP.

PS How many recent inquiries did you have(and what is your utilization%), if you dont mind sharing

Re: Credit card Inactivity

Aim_High — Mon, 04 May 2020 22:44:47 GMT

I've also had cards closed for inactivity. As mentioned, the timeframe varies, so use of any card you want to keep at least once every six months to a year is a good technique. Be forewarned that with some lenders, charging only a pack of gum twice a year if you have a $5K or higher limit may still result in a credit limit decrease.

Why do they do this? For one, some lenders may close inactive accounts to limit their potential lending exposure or to free up funds to lend to other consumers. Banks have to maintain proper ratios between assets and potential liabilities.

Also, an inactive account may be unmonitored and more subject to fraud, raising the lender's risk. No activity may indicate the consumer is incapacitated, incarcerated, or deceased.

All that said, I have an exception to note. I've had some cards with lenders whom I have active banking accounts with go inactive for much longer than two years without closure. There are some consumers who apply for a credit card with their bank for "emergencies" and don't use it regularly, so it seems that makes them more willing to make exceptions. My suspicion about the difference in this circumstance is that the banking activity is a form of contact with consumer which helps fulfill due diligence for the FI under "dormant account laws." So I'd be less worried about a card with a bank where I do other business. (For example, my USAA "Rate Advantage" Visa has low rate-no rewards but I have banking accounts and insurance with USAA. That card has not gotten much use over the past several years. Same for a low-APR low-Rewards program credit card I have with a local credit union that gets a lot of my banking actitivity.)

Re: Credit card Inactivity

Remedios — Mon, 04 May 2020 23:17:09 GMT

@Gonzozap wrote:
I keep a spreadsheet with all my cards and the date last used. I make a point of using the dormant ones at least once every 9 months, even if I just buy something and return it.

😐

Re: Credit card Inactivity

Revelate — Tue, 05 May 2020 09:58:57 GMT

It's so YMMV I wouldn't even try to give timelines.

Barclays was non-trivially aggressive for an example posted up thread but I went something like 15 months and no issue from the old Sallie account which they kept for some reason in my case.

Not only do banks sometimes keep a card around if you have a relationship, Amex seems pretty good at that too if you have any activity on your cards at all. Right or wrong on average I spend maybe $30/month with Amex over the last 6-7 years... I literally have one card with them opened 1/1/13 that hasn't been swiped since 2014 and is still open.

End of the day if you want the card use it. I put a few recurring things on my oldest tradelines but the rest? Meh. I am really surprised nobody has closed my some of my accounts for inactivity yet honestly especially with COVID running around.

I have one of those absurdly sized credit card holders tucked in with some critical documents. Not gonna lie, not exactly proud of that when I was looking at it the other day, junk tradelines for me now are apparently more than retail cards at places I never shop at.

Funny how my opinion on those have changed over time, guess I am pretty and borderline snobbish now at least in this one area of my life.

Re: Credit card Inactivity

fleetsm — Tue, 05 May 2020 16:21:42 GMT

Happened to me too. 3 accounts closed without warning biggest one being the room place with 13klimit. All accounts were i good standing at 0 balance. At this point I don't need any furniture or clothes so I'll just leave them closed for now. Bummer that they're doing this.

Re: Credit card Inactivity

Aim_High — Tue, 05 May 2020 18:01:31 GMT

@fleetsm wrote:
Happened to me too. 3 accounts closed without warning biggest one being the room place with 13klimit. All accounts were i good standing at 0 balance. At this point I don't need any furniture or clothes so I'll just leave them closed for now. Bummer that they're doing this.

That is a prime reason I migrated away from retail cards in general. Retail cards tend to get closed more easily than bank cards and you may not even know until you try to use it again. I found that annoying if it was with a store where I only occassionally shopped. If I want to take advantage of special in-store financing on furniture or something like that again, I'll apply for a new card, pay it off, then close it. But that will be the exception rather than the rule for me.

Re: Credit card Inactivity

Duke_Nukem — Tue, 05 May 2020 18:24:09 GMT

Does checking the online portal to a CC count as activity, so no charges every few months would be required to keep a CC active?

I know that CapOne sent a notice (last year I believe) that stated they needed their emails looked at occassionally or they could close your CC. I personally check all CC's at least weekly, but typically every day or two even if they are in the SD (maybe I'm too paranoid of unauthorized charges by my socks or undies...).

Just curious if actually using the CC is required to keep the account active, or could accessing the online portal be deemed as enough "usage" for some of the issuers to keep the account open.

Re: Credit card Inactivity

Anonymous — Tue, 05 May 2020 18:48:21 GMT

@Duke_Nukem wrote:
Does checking the online portal to a CC count as activity, so no charges every few months would be required to keep a CC active?

I know that CapOne sent a notice (last year I believe) that stated they needed their emails looked at occassionally or they could close your CC. I personally check all CC's at least weekly, but typically every day or two even if they are in the SD (maybe I'm too paranoid of unauthorized charges by my socks or undies...).

Just curious if actually using the CC is required to keep the account active, or could accessing the online portal be deemed as enough "usage" for some of the issuers to keep the account open.

That "may" work for some lenders, but I believe most want to see a "swipe" periodically in order to keep your cc "active." I've seen recommendations anywhere from quarterly to annual "activity" as YMMV applies to lenders and borrowers since lender algorithms may (are likely) be involved.

Re: Credit card Inactivity

PullingMeSoftly — Tue, 05 May 2020 18:36:42 GMT

Agreeing w/jedi master @Aim_High , retail cards have been the quickest to be closed for inactivity, as I foolishly allowed by my Sears and JCPenney accounts to go inactive and close, which would have been my oldest accounts (25+ years).

On the opposite end of the spectrum, Chase didn't close what is now my oldest account, after SD'ing it for 10 Years! While going through a Dave Ramsay-ish period of my life when I was rebuilding and swore off credit card use, I had a Providian card which turned into a WA Mutual which turned into a Chase something then a Chase Slate, and is now my Freedom card. I only started using it in December and hadn't touched that account for literally 10 years. No prior banking relationship (which I now have established).

Same goes for my Chase United Explorer, which was a Mileage Plus card, I didnt touch it for about 8 years, only paying the $65 annual fee, which is what I think kept it alive. Started using it when I established a banking relationship this past December.

Dodged a huge bullet on both of my Chase accounts, which are far and away my oldest accounts, that could have easily been closed!

Re: Credit card Inactivity

Anonymous — Tue, 05 May 2020 18:44:42 GMT

@Anonymous wrote:

How common is this and does every bank do it?

Perhaps not "all" will, but based on personal and anecdotal evidence posted on myFICO, some/many definitely will and do.

What impact does this have on my FICO?

An account closed for inactivity will not, in and of itself, be derogatory. Initially, the loss of that Credit Limit can and will effect your overall credit utilization. So depending on how much credit you have and the limit(s) that are lost due to the closure, the effect could be anywhere from none/negligible/moderate/significant. Further, after a period of time (approximately 10 years) that account will no longer be reported on your credit reports and will effect your Average Age of Accounts. Depending upon your particular situation, it may or may not have a significant effect.

Is there some sort of a time line for how long you can go inactive with which bank before expecting them to close?

There is no hard and fast "rule" to this. If you've been a member here for a while, you'll have read numerous stories and heard enumerable recommendations for how often to show "activity." I strongly suspect each lender has algorithms set based on the borrower's metrics to determine if/when to close an account for inactivity. personally, I try and show activity at least annually, as I've never had an account closed for inactivity for anything short of 1 year. Many here recommend quarterly or semi-annual usage.

There are a few cards that I opened long time ago that don't really intend to use anymore. For example, Amex, Barclay, and Capital one.

You may want to consider giving these accounts periodic usage to keep them active. Since you opened them a "long time ago," they will be beneficially contributing to the Average Age of Account for you. That's a personal call for you to make though, particularly if there is an annual fee involved. If it were me, and there is no annual fee, I would keep them open.