Closing a card VS. Lender closing due to inactivity

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Whatamuji
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Closing a card VS. Lender closing due to inactivity

Postby Whatamuji » Thu Jul 30, 2015 9:08 am

I've got a couple of cards I don't use on a regular basis or don't see myself using on a regular basis. Is it better to stick those cards into the "sock drawer" and let them be closed for inactivity or should I ask the bank to close them?
Kohls: $300, Discover IT: $1.8k, Capital One Quicksilver: $2k, Amazon Store Card: $2.2k, BoA Cash Rewards: 1k, Chase Freedom: 3.2k, AMEX HHonors 3k


Kevin86475391
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Re: Closing a card VS. Lender closing due to inactivity

Postby Kevin86475391 » Thu Jul 30, 2015 4:37 pm

Whatamuji wrote:I've got a couple of cards I don't use on a regular basis or don't see myself using on a regular basis. Is it better to stick those cards into the "sock drawer" and let them be closed for inactivity or should I ask the bank to close them?


I could be wrong, but I think in terms of your credit score it doesn't really matter either way. It could perhaps be an issue if an actual human analyst is reviewing your file and sees that the account was closed by the creditor rather than the consumer, because then it could perhaps look like there was a problem. However, anecdotally, this has never been an issue for me. I've had several cards closed for inactivity over the years, and as I recall from reviewing my credit report periodically most did in fact add the comment that it was due to inactivity. I've never noticed a dip in my credit score as a result of inactive accounts closing.

However, while I don't think it makes much of a difference whether you close the inactive card or they do, it definitely CAN impact your credit score either way. Namely your available credit will of course go down by however much your limit on the inactive card was, and thus your utilization will also go up, which does have a big impact on your credit score. So depending on the size of your card's limit and your general balances vs available credit on other cards, it may bring your score down.

Second, it will ultimately affect your average age of account and perhaps age of oldest account (if it is your oldest account). But positive accounts will generally stay on your credit report for ten years after they're closed, so you likely won't feel the effect for awhile, and by then the aging of your other accounts may offset the dip. I suppose in that regard it may be better to let them close it themselves since that'll likely give you a few extra months vs just calling them up tomorrow and saying, "close it." But of course we're only talking a few months in the grand scheme of things, so I wouldn't really worry about it.

Actually, I'd say you're probably better off closing the account yourself if you definitely don't want it and won't be using it again. The reason being that with the account closed you'll no longer need to monitor it for fraudulent activity. That's definitely important. If you quit using the card DON'T quit checking your statements. I remember just very recently someone on this forum posted about how they got burned when they didn't notice fraudulent activity on a card they weren't actively using. If you won't/can't keep monitoring it, close it! Second, you'll have control of when it happens. So for instance if utilization is a concern, you won't have to worry about the account getting closed right at the worst time when you've just run up your other card balances. Third, though I really don't think it will impact your credit score if you close it vs them closing it, if there IS any impact even negligible, it'll almost certainly be better if you do it yourself.

Another option of course is to just use it for one small charge once every 4-6 months or so. That'll probably be enough to keep it active - again just make sure you continue monitoring it regardless. Personally speaking, in the past there were just several times when I didn't care enough to make the effort to keep an account active or enough to proactively call and close it. Now however, my strategy is the one small charge a few times a year thing, just to keep the account history, and I check all my accounts online weekly. Sounds like a lot of work, but it really isn't at all. I do it all at once and I'm already logging in to like 10 different financial accounts (not all credit cards), so what's one more? Only takes a few seconds to login and say, "Yep, zero balance" and logout again.

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CarefulBuilder14
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Re: Closing a card VS. Lender closing due to inactivity

Postby CarefulBuilder14 » Thu Jul 30, 2015 5:41 pm

Is that a new Kohls card?

If you're willing to take 2 minutes per card/issuer to log into your less-active online card accounts every few weeks, then I say keep the accounts open.

There's a big difference between having a card you won't be using often, and a card you'll absolutely never use again. You don't want to be in the position of re-applying for cards you closed for no good reason.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
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Whatamuji
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Re: Closing a card VS. Lender closing due to inactivity

Postby Whatamuji » Thu Jul 30, 2015 11:08 pm

CarefulBuilder14 wrote:Is that a new Kohls card?

If you're willing to take 2 minutes per card/issuer to log into your less-active online card accounts every few weeks, then I say keep the accounts open.

There's a big difference between having a card you won't be using often, and a card you'll absolutely never use again. You don't want to be in the position of re-applying for cards you closed for no good reason.


The Kohls Card is my first actual credit line issued to me. Kinda forgot I had it since I never use it and I wasn't the one who wanted it in the first place as my parents opened it for me. I've only used it once and it was PIF. It was opened last year so I imagine it will be closed for inactivity next year at some point. The cards I don't see myself using actively are my Amazon Rewards card and my BoA (after the promo APR) along with the Discover card (after the double cashback promo). However it wouldn't be hard for me to keep those accounts open. I can find a use for those cards not a problem. I'm just worried that I might run into a situation where a lender would think I have "too much" credit and deny a car financing or some such thing.
Kohls: $300, Discover IT: $1.8k, Capital One Quicksilver: $2k, Amazon Store Card: $2.2k, BoA Cash Rewards: 1k, Chase Freedom: 3.2k, AMEX HHonors 3k

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Re: Closing a card VS. Lender closing due to inactivity

Postby takeshi » Fri Jul 31, 2015 11:06 am

Doesn't really matter for your credit as the impact is the same either way. However, if you're going to sock drawer you still have to actively monitor those accounts for fraud.

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Re: Closing a card VS. Lender closing due to inactivity

Postby kdm31091 » Fri Jul 31, 2015 11:37 am

Whatamuji wrote:
CarefulBuilder14 wrote:Is that a new Kohls card?

If you're willing to take 2 minutes per card/issuer to log into your less-active online card accounts every few weeks, then I say keep the accounts open.

There's a big difference between having a card you won't be using often, and a card you'll absolutely never use again. You don't want to be in the position of re-applying for cards you closed for no good reason.


The Kohls Card is my first actual credit line issued to me. Kinda forgot I had it since I never use it and I wasn't the one who wanted it in the first place as my parents opened it for me. I've only used it once and it was PIF. It was opened last year so I imagine it will be closed for inactivity next year at some point. The cards I don't see myself using actively are my Amazon Rewards card and my BoA (after the promo APR) along with the Discover card (after the double cashback promo). However it wouldn't be hard for me to keep those accounts open. I can find a use for those cards not a problem. I'm just worried that I might run into a situation where a lender would think I have "too much" credit and deny a car financing or some such thing.


Right - you can reach a point at which you have "too much available credit vs income" so keeping all of your useless cards isn't always a good plan. I'd question whether you really need the Chase Amazon and the Amazon store card both.

Whatamuji
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Re: Closing a card VS. Lender closing due to inactivity

Postby Whatamuji » Fri Jul 31, 2015 11:47 am

If I leave the useless cards active and decline auto CLI's would that reduce the chance I hit the "glass ceiling" of too much credit vs income?
Kohls: $300, Discover IT: $1.8k, Capital One Quicksilver: $2k, Amazon Store Card: $2.2k, BoA Cash Rewards: 1k, Chase Freedom: 3.2k, AMEX HHonors 3k

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CarefulBuilder14
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Re: Closing a card VS. Lender closing due to inactivity

Postby CarefulBuilder14 » Fri Jul 31, 2015 12:50 pm

Whatamuji wrote:If I leave the useless cards active and decline auto CLI's would that reduce the chance I hit the "glass ceiling" of too much credit vs income?

I think you need to be patient, garden, and not do anything in a rush. Your card preferences seem to be changing too frequently for closing cards to make much sense right now.

My card preferences changed a fair amount and still change a little now and then. If an issuer closes an account or gives a CLD due to inactivity (or trivial activity) then I'd still prefer that to closing something I may end up unexpectedly wanting again soon.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

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Re: Closing a card VS. Lender closing due to inactivity

Postby notcool » Fri Jul 31, 2015 1:06 pm

Whatamuji wrote:If I leave the useless cards active and decline auto CLI's would that reduce the chance I hit the "glass ceiling" of too much credit vs income?



Is there any particular reason you are worried about hitting this glass ceiling? Such as applying for a car loan or mortgage in the next few months?

I think letting the cards age and build credit history is probably a wise idea instead of worrying about the glass ceiling. Most of your cards have low limits anyway, I'm not sure you are in danger of hitting a glass ceiling. Maybe, though.

If you never shop at Kohls or Amazon, maybe the Kohls and Amazon cards aren't worth keeping. But all your other cards are generally good credit cards to have. Of course, if you feel you have more cards than you can easily keep track of, it might make sense to close some. Leaving a card open probably increases the chance of identity theft. However, closing it means that card won't build credit history.

Really I don't think there are right or wrong answers. If you manage your credit well for a few years, your score should be strong and, assuming sufficient income, I would expect you can qualify for other loans.

Whatamuji
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Re: Closing a card VS. Lender closing due to inactivity

Postby Whatamuji » Fri Jul 31, 2015 5:55 pm

I don't have an issue keeping track of them on a regular basis as I've gotten into the habit of doing so. And I don't plan on taking any loans out in the next couple of months. I was just thinking down the road in the next few years I'll want to take a loan out for a new car. And I just want to avoid the chance of hitting the ceiling. But I think I'll be fine by the time it comes to get a loan so I'll keep the cards active for the time being. Thanks for all the help guys. :)
Kohls: $300, Discover IT: $1.8k, Capital One Quicksilver: $2k, Amazon Store Card: $2.2k, BoA Cash Rewards: 1k, Chase Freedom: 3.2k, AMEX HHonors 3k



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