Got a letter in the mail today telling me that my credit card is being canceled due to non-use
I don’t really give a crap, it’s a card that I have lowered the limit to $500 so I won’t miss it - but the thing is that it’s my oldest card so it kind of sucks for credit score purposes.
So, yeah, fine. Unfortunately I have another card with the same entity which I use a fair bit. Fine. But I figure if they don’t want my business, they don’t want my business at all - i’m not prepared to let them pick and choose which business they want to keep and which one they want to release.
There is no balance on this card (I mean a revolving balance - obv. there is always a balance on the acct. as I actually use it). I would like to keep both cards, but I am 100% prepared to get rid of the other one.
a) any chance they reverse their decision on the $500 card if I “threaten” (start the process of) canceling my other card?
b) how is the closure of my $500 account described on my credit report.
Yes and no. Fair Isaac still holds their scoring model very close. It will negatively impact you because A) It’s your oldest open account and B) It’s likely your ratio of used credit against total credit will increase, by virtue of the fact that you no longer have that card adding to your total credit (this may be negated if the card has a balance reported each month because you are using).
It will beneficially impact your credit score because you have less available credit.
Overall, I would not be too concerned about your score, the important thing is you pay your bills each month and seem to otherwise present less risk, IMHO you should cease doing business with the company because you don’t like their practices, and that’s the only way to get “back” at these companies these days-- Vote with your dollars.
sure, i get all this… i was asking more if “closed by issuer” is a bad thing.
I know they (conventional wisdom) have said to make sure that it shows up as “closed at customer’s request” if you’re closing an account on your own volition, presumably because other “closed notations” could be perceived as a bad thing. I obviously don’t have that choice here, but just wondering…
And, I agree. Part of it is is vindictiveness, but part of it truly is the “no, if you don’t want my business, you don’t want my business” inconsistency of it (to me) that irks me.
There is no difference in the scoring model that I am aware of between closed by issuer and closed by customer. The important data is in the numbers, payment history, average balance, age of account and so forth.
But in either situation, the credit limit was only 500 bucks on the now-closed card, so it’s a minimal impact.
Closing the currently-active card, which presumably has a higher limit, would have more of an impact. I don’t know how long an account has to be open for the longevity to no longer make a huge difference - e.g. is 3 years as good as 20+ years?.
But in the long term, unless you’re fixing to take out a mortgage or something in the next month or two, I wouldn’t sweat it. It’ll all even out in the long run.
Strictly IMHO: Certainly vote with your dollars: get a new account elsewhere, leave the current one open though for the longevity, just quit using it except for 10 bucks here or there to keep it open. You’ll have the lower “credit used” amount offset by the higher “credit available” amount, you’ll keep the longevity, and you won’t be funneling much income to the scummy bank anyway.
One thing you might do is write to them asking them to keep the account open because it’s now your emergency spare card - in case you lose the other card / the other card gets cloned / whatever - and you’d really like to keep both accounts with the same provider.
This won’t even be a blip on your credit scores. It’ll still show up on your reports for 10 years so your age shouldn’t be affected and it’ll give your other credit accounts time to age.
Obviously the credit environment has undergone significant change in the last couple years. Keeping your cards in the sock drawer used to be an accepted practice but likely to cause adverse action these days. Simply put, if you want to keep your credit cards use them frequently.
I can’t explain it rationally, but acquired quite a number of cards with credit limits that far exceed my needs. Still, I cycle through them every couple months at least, with small purchases that I pay in full as soon as the statement cuts. So far, that has kept my personal bleeding down to an acceptable limit. I did lose half my available credit on a couple of cards, but losing 12000 on a 25000 card just doesn’t seem too drastic, especially since as soon as it happens one of my many other cards will offer to raise my limits on their product.
If anything, your score will probably go up slightly because a 500 limit card would likely be considered a sub prime card in credit models and they tend not to score very well.
Were I in your situation, I’d keep your existing card with them, use it the way you have and shop around for another card or two. And watch, in another six months or a year the rotten credit card folks will be filling your mail box with weekly offers of a new credit card with better limits.
Credit Union cards have been more stable through this credit mess and that’s probably what you should be pursuing.
I imagine that it’s because if the OP starts using it, that’s indicative that he’s having financial problems(e.g. lost his job) and then the chance of the credit card company getting that money back is low.
I seriously doubt this. The one they’re canceling is under 1% of my total credit.
Now, another Q: the card I’m considering canceling is going to significantly deplete my credit availability - by about 10-15% or so. Bad idea? My “utilization ratio” won’ change, though, since I don’t carry balances.
The reason credit card companies are reducing and canceling credit is to reduce their potential exposure.
In other words, it makes their books look better.
Things have been out of whack for a long time now, which is part of the reason these banks have been in trouble. Up until a couple years ago they were almost shoving unsecured credit at us, and a lot of folks that shouldn’t have said, “yeah sure”.
Again, I wouldn’t close another account just to “punish” them. Keep it and buy a pack of gum with it every month and pay it off. They don’t seem to mind losing customers these days, especially if you have some relatively good terms or reward cards. That doesn’t mean that they won’t do the same thing to you with your remaining card, cut it to “toy” limits, but if you maintain your good credit and show some use, you’re more likely to stay under their radar.
If you don’t have perfect credit in this market, chances are you are going to lose more credit as they balance things out.
Just to clarify, I was the one who cut it to the $500, and I have perfect credit
I suspect the reason they’re doing it is because it’s a visa card is a holdover from when they purchased another card issuer in the past, and they don’t currently issue visa cards anymore. It’s probably a pain in the butt to keep these cards on their books. Still doesn’t change my impression of the operation, though.
Gottchaya. I did miss that. Guess I’ve just been hearing so many complaints about folks’ credit being reigned in I just turned it around in my mind.
Personally, I hate giving what I consider hard earned ground. I worked at purposely building my credit portfolio and playing the credit game to see just how high I could get my scores. Big limits beget big limits and those along with multiple credit resources, properly managed, go a long way to boosting ones credit score.
In my line of work I look at a fair number of credit reports and without exception, folks with the best scores, those around 800 have a lot of cards with big limits and no dings on their credit.
Everyone looks at credit a different way. For me it’s just become a game. I don’t really need it, but it does make my life easier and the rewards are tough to beat. I love using someone elses’ money to pay my bills for awhile, as long as it doesn’t cost me and they’re willing to pay me 2-5% off my bills it seems worth the effort!
