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How long will it take of disuse for a bank to close a credit card?

apache2a
Valued Member

How long will it take of disuse for a bank to close a credit card?

I have two cards that I'm not using.  I don't want to.  Paying off the other three, don't want to really use a card ever again (as I'm sure a few other people on here feel).  

 

For building credit, I've seen it is best to have 3-4 cards, keeping all but one at a time with no balance, and with the one that does get a balance paying it off before it posts and a balance hits the report.  That makes sense...but for those of us that are paying down the cards that do have balances, how do you keep the ones with no balance open?  Do you still need to charge something on them monthly and then pay it before it hits?  Can you do it once every three months or once every six months?  I've seen that this balance should be between 1-8.9%...is that accurate?  So paying a Netflix subscription with a card (or Itunes) monthly won't help in this regard because it is too small an amount?  Will the bank just close it if I did this?

 

When the cards all have zero balances, you just charge something to one of them (taking turns) once a month and pay it immediately?  So if you have four cards, you charge something on each one once every four months and pay it off right away?

 

If you DON'T do this (especially for me now...I'd rather not charge anything if possible) how long until they close your account (I'm guessing this depends on the cards...mine are BoA and USAA)?

 

Thanks and sorry if this is all self explanatory, just trying to get it straight in my head.

 

I was just pre approved for a mortgage yesterday and my scores are hovering around 700 (694, 705, 715).  Scores were higher a few months ago (my wife's were lower) but I restructured everything and paid off her high interest loans (my scores took a big hit, her's went way up, higher than mine now...that's ok).  So I'm not too worried about the short term, but more so for building up a decent credit score over time.

Message 1 of 6
5 REPLIES 5
pinkandgrey
Community Leader
Senior Contributor

Re: How long will it take of disuse for a bank to close a credit card?

It REALLY depends on the bank. Some close cards within 3 months, others a couple years. My personal philosophy? If I don’t use or want it, CLOSE IT. I know about the utilization and AAoA game, but still. I’m more concerned with my own financial situation than a number in a credit report. Plus, the accounts will factor into age for something like 10 years. 

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Message 2 of 6
apache2a
Valued Member

Re: How long will it take of disuse for a bank to close a credit card?

Amen!

Message 3 of 6
CreditGuyInDixie
Super Contributor

Re: How long will it take of disuse for a bank to close a credit card?

My comments below in blue.

 


@apache2a wrote:

The answer to the question in your subject line is that it can vary a lot according to the issuer and whether the card has never been used.  Cards that have never been used can be closed due to inactivity in as little as three months, especially if they were never activated.  Major credits cards (VISA, Mastercard, Discover, Amex) are usually closed 13-19 months after the last payment or transaction, though rare cases of six months (low end) or four years (high end) have been reported as well.
You can read more about it here (post #2 may be especially helpful):

https://ficoforums.myfico.com/t5/General-Credit-Topics/Credit-cards-closed-due-to-inactivity/td-p/53...

I have two cards that I'm not using.  I don't want to.  Paying off the other three, don't want to really use a card ever again (as I'm sure a few other people on here feel).  

 

As I read the rest of your post (below) it sounds like you do indeed plan to keep using your cards to prevent them from being closed.  But the sentence above seems to imply that you'd like to stop using them altogether.  Can you clarify?  Keeping your cards open is easy to do and costs you nothing, while having all cards closed will hurt you a lot down the road.

 

For building credit, I've seen it is best to have 3-4 cards, keeping all but one at a time with no balance, and with the one that does get a balance paying it off before it posts and a balance hits the report. 

 

The approach above is not needed to build credit (i.e. increase your scores gradually over time, which is what you say you want to do in your last few sentences).  For one thing, you don't have to limit yourself to only 3-4 cards; you could build credit with ten cards as well (3-4 is fine though).  More importantly the "all zero except one" (AZEO) strategy (with the remaining card having a small balance) is only needed in the 45 days before an important credit application.  AZEO (with ultralow utilization) is a short term strategy to get you extra points quickly but it does nothing to help you build credit over a period of years.

 

To build credit you just need to keep individual cards at under 48% and total CC utilization at under 28% while never being late on a payment.  Couple that with using each card once every six months to prevent it from being closed and you have a good strategy for building credit.

 

That makes sense...but for those of us that are paying down the cards that do have balances, how do you keep the ones with no balance open?  Do you still need to charge something on them monthly and then pay it before it hits?  Can you do it once every three months or once every six months?  I've seen that this balance should be between 1-8.9%...is that accurate?  So paying a Netflix subscription with a card (or Itunes) monthly won't help in this regard because it is too small an amount?  

 

FICO rounds all percentages up.  Thus an $8 balance on a card with a $10,000 credit limit will be rounded up to 1% utilization.  Ultratiny balances (e.g. 88 cents) are often reported as zero, so the recommendation on these forums is to use a balance of $5 or higher if you want to be sure it gets reported.  $5 is totally safe.

 

  Will the bank just close it if I did this?

 

When the cards all have zero balances, you just charge something to one of them (taking turns) once a month and pay it immediately?  So if you have four cards, you charge something on each one once every four months and pay it off right away?

 

That would be a lot of work and would also hurt your score.  You want at least one card to always report a positive balance.  FICO has a 15-20 point penalty when all cards report $0.

 

If you DON'T do this (especially for me now...I'd rather not charge anything if possible) how long until they close your account (I'm guessing this depends on the cards...mine are BoA and USAA)?

 

It's in your interest to keep all five cards open, unless they have annual fees.  This is is easy to do.  See above for details on how.  E.g. just take them to the grocery store every six months and buy a couple items with each.

 

Thanks and sorry if this is all self explanatory, just trying to get it straight in my head.

 

I was just pre approved for a mortgage yesterday and my scores are hovering around 700 (694, 705, 715).  Scores were higher a few months ago (my wife's were lower) but I restructured everything and paid off her high interest loans (my scores took a big hit, her's went way up, higher than mine now...that's ok).  So I'm not too worried about the short term, but more so for building up a decent credit score over time.


Paying off all your loans was not an ideal move if you are preparing for a mortgage.  It's in the past, however, so there is no help in second guessing it.  Let us know if you'd like advice about raising your mortgage scores now before your mortgage goes through final underwriting. 

Message 4 of 6
apache2a
Valued Member

Re: How long will it take of disuse for a bank to close a credit card?

Thank you so much, that clarifies a great deal.  To clarify on one of your questions, I would prefer to just close the accounts, but I'll keep them open if it will help build my score (you noted that it it beneficial to keep them open and just charge something once every six months or so, so that is what I will do).  So basically when the people say 3 or 4 cards is best...what they really mean is a minimum of 3-4 cards, or that you don't need more than that (because the credit inquiries / new credit will hurt your score when you open them?)

 

The school loans were discharged, not paid off, so I think this was probably the better way to go about it (freed up 510/month in DTI).  From what I've read, the TPD discharge usually moves your score down slightly (because the installment loan comes off) but can in some instances result in a large drop (depends on how it is reported, but it looks like Sallie Mae is the one that reports it in the very negative way and I'm not with Sallie Mae).  So my expectation is that my score will drop, but not a huge amount....although I am prepared for a possible large drop just in case.

 

The scores were 695, 715 and 705 (not sure which is from which agency).  This is with 52% utilization across all cards (5 total)...but I have since paid off one of the cards (6500) that brings utilization down to somewhere around 32% (but this doesn't reflect on the credit report yet or the scores I noted).  According to the simulators I used this should boost my score considerably (although I don't trust the simulators to be accurate)....which should offset any decrease by the discharge enough to keep me above the 620 threshold for a VA loan.  I also paid down the balances on two of the other three cards to get under 89% (the last one was already under 89%)...unfortunately I just did this a couple days ago.  I initially got each under 90%...then realized it needs to be under 89%...but I missed the billing cycle, so won't reflect for 2 months (it seems this is always the way with my score...I'm always a step behind).  Any way, it is unlikely we will close in less than 2 months, so this should be fine.

 

My plan is to work on the financial aspect of things at this point and not the FICO score because I don't really need to chase a score higher than 620 at this point...which should be no problem.  I currently have $3000 a month extra to work on financial issues.

 

The three cards that I have are all in 0% APR time frames (these end in October, December and May 2020)...so the plan is to pay each one off a month before the APR changes to the real rate (22% average I think).  This isn't the fastest way to increase my credit score, but I think will work well for my finances and eventually the FICO over the next year.

 

I've read about installment loans (school loans) dropping off and hurting the score and that often people get new installment loans.  So I've considered getting a very small installment loan, but not sure if this will really help (with my luck it would actually hurt).

 

Hopefully this makes sense, and feedback is much appreciated.

Message 5 of 6
apache2a
Valued Member

Re: How long will it take of disuse for a bank to close a credit card?

As a snapshot:

 

CCs

 

Capital One:  4300/5000 (86% UTI) (0% APR until December 2019)

Chase:            3805/4300 (88.5% UTI) (0% APR until October 2019)

Citi:                 4850/5500 (88.5% UTI) (0% APR until May 2020)

 

USAA:             0/10,000

BoA:                0/14000

 

My wife also has three separate CCs but they are all paid to 0.

 

No other debt at this time.

All ontime payment history, no derrogatory remarks.

AAoA is about 6 years (three of the listed are new this year with the APR at 0%).  Oldest is about 15 years.

 

Causes of lower score on the reports say:

 

Revolving utilization is too high (currently working on this)

Balance too high compared to original loan amount (this is with the student loans that will be off the report soon.  They report the original balance as the balance for the month, so when the loan is in deferment, the loan amount becomes higher than the limit....I contested this and tried to get it fixed, they fixed it for one month then just reported the same bad way again a month later, so I don't think there is any way around this...but shouldn't be an issue soon any way).

AAoA is not long enough

Too many inquiries (I got aggressive about fixing all this last summer...from July to August I have 9 inquiries, 5 to credit cards which I got and used 3 for balance transfers to 0% APR and 4 for student loan refinancing which I never used).  I think I just need to wait on these and they'll have minimal impact after August 2019 (although now I have the new one for the mortgage, but no way around that).

 

I think that is it.

Message 6 of 6
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