Bad advice

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MemberSince99
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Bad advice

Postby MemberSince99 » Thu Jul 18, 2013 9:05 pm

On the FICO forum someone wanted to close a couple of cards they no longer wanted (both were pretty new).

Knowing the FICO people, why in hell would you even ask them what you should do when you KNOW what they are going to tell you. It's like asking the manager of a restaurant if you look hungry or your hair stylist if you need a hair cut - you know the answer before you even ask.

Needless to say this was the first response:
Well closing new cards is never a good idea. You should SD and forget about them.

No, THAT is a bad idea. Let me explain why. If someone should steal your identity and use these cards and you have SD'd them and forgotten about them, you only have so long to dispute errors (I think it's 90 days but I'm not sure how long). Now sure, they will bill you but you run the risk of ignoring or not getting that, and basically not learning you've been had until it may be too late to prevent real damage. And if you have them still on auto-pay, you get money pulled out of your account that you have to catch and then dispute and that's gone in the meantime until whenever you should be able to get it back.

I do NOT feel it's wise to just forget about any account that way. At least, I'm personally not willing to take that risk. I guess if the responder is, let him or her deal with any consequences. I'll grant odds are they will be fine, but why run the risk for cards you will never use anyway, if you really will never use them.


MB131174
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Postby MB131174 » Thu Jul 18, 2013 9:32 pm

The only saving grace might be when you get the bill in the mail/email stating "total balance $X, minimum payment $X due by..."
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RewardHop
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Postby RewardHop » Thu Jul 18, 2013 10:34 pm

Mint.com can help you to catch this, it shows you your balances on all your cards. Its extremely convenient with their mobile app, I will occasionally check it when I have a spare moment while waiting in line, etc.
[size=60]
Amex BCE: 3% grocery, 2% gas
Bank of America Better Balance Rewards MC: $25/quarter bonus
Barclaycard Rewards Visa Signature: 2% gas, groceries, utilities
Capital One Quicksilver Visa Signature: 1.5% everything
Chase Freedom Visa Signature: 5% rotating
Citi Forward Visa: 5% restaurants/fastfood, movie theaters, amazon.com
Discover It: 5% rotating
SallieMae MC: 5% Groceries, Gas, Amazon
US Bank Cash+ Visa Signature: 5% electronic stores, restaurants
Sock Drawered: Chase Sapphire, Chase Amazon[/size]

takeshi
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Postby takeshi » Fri Jul 19, 2013 5:54 pm

MemberSince99 wrote:or your hair stylist if you need a hair cut - you know the answer before you even ask.

Maybe with yours but not with mine.

MemberSince99 wrote:I do NOT feel it's wise to just forget about any account that way.

SD and "forget about them" aren't necessarily mutually inclusive. I monitor all my cards, both active and SD.

MemberSince99 wrote:At least, I'm personally not willing to take that risk. I guess if the responder is, let him or her deal with any consequences. I'll grant odds are they will be fine, but why run the risk for cards you will never use anyway, if you really will never use them.

Why assume that your preferences should be everyone else's preferences? On any topic. Nothing wrong with pointing out your concerns but your methods and preferences with handling your cards are only yours. There's more than one way to skin a cat. I think any advice assuming that there's only one way to handle something is bad advice. Advice really need to take the person asking for the advice into consideration.

If the person asking is likely to SD the cards and forget about them then, yes, that would be bad advice. I've probably run across the thread you're referring to but I can't recall the details so I can't really comment on the thread itself.

flan
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Postby flan » Fri Jul 19, 2013 9:22 pm

MemberSince99 wrote:No, THAT is a bad idea. Let me explain why. If someone should steal your identity and use these cards and you have SD'd them and forgotten about them, you only have so long to dispute errors (I think it's 90 days but I'm not sure how long).


Nope. Federal law does not provide a time limit for credit card fraud, with the exception of giving you zero liability if you report the loss theft of the physical card before it's used. There's a $50 limit for card present fraud, $0 for card not present. For debit cards, there are time limits. There are time limits on non-fraud billing errors (I charge you $100 instead of $10, or don't credit a return, for instance.), but a card in your sock drawer isn't going to have those errors.

It becomes rather more difficult to report fraud the later you wait, but the legal protection is still there. Proving it is also somewhat harder.

Also, a card you don't use, and keep in a drawer isn't going to be stolen from a skimmer or a compromised website. (Except if it 's the bank's, of course.)

MemberSince99
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Postby MemberSince99 » Sat Jul 20, 2013 5:57 am

But again, why would you leave ANY potential liability and issues open on something you really are never going to use again? Just to have it? I mean is this "Hoarders" for credit cards?

Why leave any liability open if you truly never will use it? Nothing is 100%, I've been literally scammed and still ended up paying even under this system, why take the risk? You are assuming that they just take your word you got ripped off and they do the right thing, suppose they don't and they don't want to eat that and would rather see you eat it? There is ALWAYS and I mean ALWAYS the possibility of you losing no matter what the law says it's naive to think otherwise.

No one has ever been able to explain that in a way that I understand, and I just have to believe it goes back to human nature to hoard stuff.

flan
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Postby flan » Sat Jul 20, 2013 7:39 am

MemberSince99 wrote:But again, why would you leave ANY potential liability and issues open on something you really are never going to use again? Just to have it? I mean is this "Hoarders" for credit cards?


Lenders do not like accounts that were opened just to get the sign up bonus. Accounts only open a month or two look like that. They also make you look flighty; lenders don't like flighty borrowers, even if they're ones who pay back what they borrow. There are substantial acquisition costs of a new customer, and someone with a bunch of accounts opened for a month or two looks like a loss.

MemberSince99
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Postby MemberSince99 » Sat Jul 20, 2013 7:50 am

I think we are talking about a couple of different things here.

We are talking about why you would leave open an account you will never use again. I don't mean you are just setting it aside to think on it - I mean you are all done with it. I see no reason to leave it just sitting around, especially given it's a potential liability.

You on the other hand are worried about what a lender thinks of the fact you didn't care to keep their card long term. I think these are separate issues.

I would argue that if you are really worried about the lender here, leaving open a line of credit they could extend to someone else and make money on is worse than just leaving it open and never using it. They could extend the credit line they gave you to another customer who would actually use it and make money on it as opposed to sitting in your sock drawer where they aren't making a dime. If I'm a lender, what good is that card doing me when you just leave it open forever and never use it? Eventually I'm going to close you down for inactivity anyway. So it all comes back to how the hell does that make any sense?

flan
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Postby flan » Sat Jul 20, 2013 10:52 am

MemberSince99 wrote:

You on the other hand are worried about what a lender thinks of the fact you didn't care to keep their card long term. I think these are separate issues.


No, I'm worried about what the *next* lender thinks. Lenders use all sorts of information when processing an application. A history of opening and closing bank cards may be a denial reason, it may be a reason to put you in a higher rate bracket, or a reason to give you a toy limit.

MemberSince99
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Postby MemberSince99 » Sat Jul 20, 2013 11:38 am

Possibly, but speaking as someone who has honestly opened and closed a LOT of cards by pretty much anyone's standards over the last two years, I haven't seen it.

You might say well Amex only gave you 2k on your BCP, but they do that with a lot of people that I've read. Likewise Discover, I mean need we say more with them? And I got the best rate on the BCP of 12.99%. Not that I honestly care about that as I don't carry a balance, for all I care it could be 100%, it really wouldn't bother me or matter.

I do realize you will be able to pick examples of people who had this happen to them, I probably could too. It's always a YMMV game. And I still see no compelling reason for me to leave open tradelines I will never make use of. I guess we just have to agree to disagree on this one. I'm personally not just going to put a card I know I'll never use again into a sock drawer and hope nothing bad comes of it and wait for the lender to close the thing out.



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