Updating April 2019:
Curious to hear whether anyone else knows of case studies of cards closed due to inactivity. Or who knows of the flip side: cards that have stayed open for a very long time WITHOUT being closed.
I am especially interested in hearing anything that would cause me to tweak the general Received Wisdom given in post #2. If people have Cap One, Discover, or Wells Fargo cards that have not been used for 13+ months without a problem, that would be especially welcome.
Hello all. The last time I gathered a lot of data regarding this subject was 2-3 years ago. So I'd like to give it another stab, particularly since some CC issuers are starting to implement credit line decreases (CLDs) and more importantly closure of cards due to inactivity. The folks here need a good place to go that summarizes the current wisdom about how to prevent early closure and tests it against as many certain case studies as we know of.
Here is a recent article about the increased levels of closures and CLDs and Discover and Cap One:
I would like this thread to not be sidetracked with discussion of whethe the stock market is going to crash, whether other CC issuers will follow suit, etc. Those are great things to talk about but I am most interested in collectiing case studies of people who's cards have been closed due to inactivity (could be any time in the last 20 years). Feel free to mention any you know of if you are certain of most of the details (doesn't have to be your card that was closed).
Here is what I am looking for:
* CC issuer and model of card that was closed.
* Month/Year it was closed
* How many months elapsed when no purchases were made?
* How many months elapsed when no payments were made?
* Had any purchases been made EVER on the card?
* What is a rough estimate of the person's FICO 8 score, total utilization, and individual utilization when it was closed? (By individual U we mean utilization on that card, the one that got closed.)
* When the card was closed, had the cardholder ever been late in payments? (Even by a few days?) If so when was the last late payment compared with the approx date of closure?
* When it was closed did the cardholder have other cards with that issuer? If so, were any of these closed?
Only post case studies if the issuer told the cardholder that it was closed due to inactivity.
Finally, feel free to post case studies of cards being unsused for very long times WITHOUT being closed. E.g. a major card being unused for 19+ months or a store card being unused for 25+ months. Try to give the same data as indicated above.
If you cannot answer all the questions with confidence, just make your best guess as to the answer -- the more case studies we get, the better!
Summary of current wisdom for avoiding CC closure due to inactivity:
* Always activate a new card within ten days of receiving it.
* Always use a new card for at least one purchase in the first 50 days.
* Major cards (Visa, MC, Discover, Amex logo): using it once every 6 months should protect you 100% against early closure. (But see below)
* Store cards (no major logo): once every 12 months should be safe.
* Unusually strict issuers:
* Wells Fargo cards should be used once every four months to be 100% safe.
* Although there are no data yet, the news story above suggests that Discover and Cap One might benefit from the four month approach.
Very happy to update this "current wisdom" if we get more case studies suggesting that this is warranted.
Note that the strategies above go a bit overboard from what you strictly speaking might need. Past data seem to indicate that most closures due to inactivity happen in the 13-18 month range for major cards (with some cases being reported of a card staying open for years without being used).
And for store cards it seems like two years might even be safe (possible exception of store cards that are typically used frequently, e.g. Target).
Good idea, alot of folks get caught up in CC closures or decreased credit limits from inactivity.
I learned my lesson with the Target Red Card. I got it in 2012 when I was rebuilding, but the thing is I rarely shop at Target, they seem like a Walmart wannabe and the stores are way out of the way for me. I didn't use it for just over a year and they CLD'd me from $1200 to $200. I made a few small online purchases the next few months but they still refused to restore my CL so I closed it, not worth the hassle.
But lesson learned. I still have a no-fee Merrick Bank CC from my rebuild with decent $3100 CL, it hasn't got anything but my $10.80 /mo. Netflix by mail sub for a couple years and that seems to keep them happy. I use Tracfone pre-paid for my cell phone as talking is the least thing I use my phone for and it uses the Verizon in my area, so a $20 airtime purchase every couple of months is my opportunity to toss that onto a seldom used card. My Lowes card has a $10k CL that helps pad my utilization but I also plan to use for deferred interest financing for new flooring in the not too distant future so I take care to use it every few months, I stopped by and bought a $9 house plant in Sept., the first charge since March, right at the 6 month mark.
That article has me thinking about my Cap 1 accounts. I have a QS w/$20k CL from combining two $10k QS, and I also have the no AF Spark Select card with $8k CL. They both have 0% BTs on them so the monthly payments should prevent any inactivity adverse action, but I toss them a Tracfone charge twice a year or so just to be safe. Cap 1 just approved me for a Savor card w/$7k SL in Sept., so I think that indicates they're happy with me, but the Spark BT needs to be paid off by March so I plan to close it then, 1.5% rewards doesn't cut it anymore. I'd love to combine it with Savor but you can't combine biz cards with personal ones, so I'll just try for a CLI on Savor after I close Spark.
Good point about making a payment. That certainly constitutes activity, and thus if a person were to make no purchases on a major CC for three years (but make monthly payments on an existing balance) the clock of "inactivity" would not begin ticking until after his last payment.
DW just had a card closed for inactivity.
CC issuer and model of card that was closed.
Month/Year it was closed
How many months elapsed when no purchases were made?
How many months elapsed when no payments were made?
Had any purchases been made EVER on the card?
What is a rough estimate of the person's FICO 8 score, total utilization, and individual utilization when it was closed?
FICO 8 EX 802, TU 803
Total Util 15%
Individual Util 85%
When the card was closed, had the cardholder ever been late in payments? (Even by a few days?) If so when was the last late payment
compared with the approx date of closure?
When it was closed did the cardholder have other cards with that issuer? If so, were any of these closed?
Yes have Snyc Lowes No it was not closed and has current activity.
Thanks so much, MakingP! This is the kind of detailed info we need.
In your wife's case, the driving issue was that not even a single purchase had ever been made on the card. Major cards are often closed at Month 6 in that event (though store cards like your wife's might get a few more months).
Yes it was no big suprise to us that it was closed. We were going to put in new floors last year and planned on paying cash for half and 0% financing for the other half. Then we had some other home repairs that came up and used the cash we had set aside, so we were putting it off the the first part of 2019. Unfortunately Sync closed it before then. That card isn't one we could put a few small purchases on to keep active.
That card isn't one we could put a few small purchases on to keep active.
Another helpful observation by MakingP. Store cards are always more of a challenge to keep open. You have to buy something at that particular store. Very often there is nothing you absolutely need at that particular store (or even if they do sell something you need it may be much more expensive there -- e.g. buying a polo shirt at Neiman Marcus).
When you are buying something you don't need, or paying more than you need, the cost should be viewed as an annual fee to keep it open. Major CCs by way of contrast can be used for groceries, gas, cell phone bills, etc.
Store cards also hurt your score in some non-FICO models (like the ones used by the insurance industry) and thus that can be yet one more drawback to having them.
Of course in MP's case it was just an accident that his family couldn't use the card within the first 90 days -- otherwise it was good thinking on their part.
I've only had one account closed due to inactivity... it was a Fingerhut account that I opened in 2008, made exactly one purchase, paid it off over six or eight payments, and the account remained open and empty for nearly ten years before they closed it for inactivity.
...and they were even nice enough to send me a warning letter!
Scores in the mid 600s, never a late on that account or any other.