Credit Cards - cancel or let close due to inactivity

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ChrisB
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Credit Cards - cancel or let close due to inactivity

Post by ChrisB »

I have more credit cards than I need. Until now I just kept them open but with the cards put away and use locked using mobile apps. We opened three accounts a couple years ago to get some pretty spectacular bonuses during a remodel.

I just got a notice from Capital One that one of these unused cards will have the account closed in July due to inactivity. Is it better to close the card myself or let it be closed by the issuer?

Two cards are with Capital One that we don't use. Both have very low credit limits so not worried too much about credit utilization impacting our credit score. Credit score is over 800 and we refinanced a few months ago so have no plans to open any sort of accounts where credit score would be a worry.

Thoughts on best way to close an account? Or, make a small charge to keep the account open and just keep the cards on ice?

And, none of these "extra" cards have annual fees.

Happy Friday. Cheers
:beer
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bogleblitz
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Re: Credit Cards - cancel or let close due to inactivity

Post by bogleblitz »

Both cancel or inactivity are the same. Both will affect your credit score a little bit.

I would choose inactivity since there is nothing you need to do.
boogiehead
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Re: Credit Cards - cancel or let close due to inactivity

Post by boogiehead »

ChrisB wrote: Fri Apr 23, 2021 4:56 pm I have more credit cards than I need. Until now I just kept them open but with the cards put away and use locked using mobile apps. We opened three accounts a couple years ago to get some pretty spectacular bonuses during a remodel.

I just got a notice from Capital One that one of these unused cards will have the account closed in July due to inactivity. Is it better to close the card myself or let it be closed by the issuer?

Two cards are with Capital One that we don't use. Both have very low credit limits so not worried too much about credit utilization impacting our credit score. Credit score is over 800 and we refinanced a few months ago so have no plans to open any sort of accounts where credit score would be a worry.

Thoughts on best way to close an account? Or, make a small charge to keep the account open and just keep the cards on ice?

And, none of these "extra" cards have annual fees.

Happy Friday. Cheers
:beer
I don't believe there is a difference between closing an account due to inactivity vs. closing the account on your own as long as the account is in good standing/zero balance when you close the account. I personally just leave my accounts open and lock the card (when possible) as it helps with low credit utilization and length of time of credit (as most of the cards I don't use anymore were cards I applied way back in the days...). The only time I would proactively close a credit card is a card that has an annual fee I no longer use or if I have too much credit line with an issuer (i.e. chase) and need to free up some credit line so I can apply for another card from that issuer soon.

I don't make small charges to keep the card active as I think its too much hassle and its not a big deal if the credit card company closes one or two of my inactive accounts.
mrc
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Re: Credit Cards - cancel or let close due to inactivity

Post by mrc »

That there is little difference is good to know. I was charging a bit on every card to keep it alive and one day realized we don't need 8 cards. I'm letting four cards season out over time: AMEX, Discover, a Chase Visa, and a Citibank MasterCard. It will be interesting to see how long each lasts. The cards I'm keeping are the Citibank double cash back, Chase Amazon, Citibank Costco, and a local credit union card. I would keep two, maybe three if I could.
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ChrisB
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Re: Credit Cards - cancel or let close due to inactivity

Post by ChrisB »

Thanks for the feedback. Glad to hear there is no difference regardless of what I do.

Honestly, only cards we have that have annual fees are our 2 airline cards. But, even one trip a year on those airlines for a family of four they pay for themselves with the waived baggage fees, seat selection, and early boarding.

...you know, back when we traveled... :annoyed
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avenger
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Re: Credit Cards - cancel or let close due to inactivity

Post by avenger »

I cancel them. But I'm a staunch minimalist.
I have two credit cards - one is joint with my partner, one is my personal.
Sometimes I'll open a card for the bonus, but will cancel after I've redeemed it.
I'm not sure there's a right or wrong answer, but I'm going for simplicity.
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UpperNwGuy
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Re: Credit Cards - cancel or let close due to inactivity

Post by UpperNwGuy »

I would rather that my credit report show any closure as having been initiated by me rather than by the lender.
mrc
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Re: Credit Cards - cancel or let close due to inactivity

Post by mrc »

UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been done at my initiative than at the lender's initiative.
Is that something that is specified on a credit report?
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UpperNwGuy
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Re: Credit Cards - cancel or let close due to inactivity

Post by UpperNwGuy »

mrc wrote: Fri Apr 23, 2021 5:38 pm
UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been done at my initiative than at the lender's initiative.
Is that something that is specified on a credit report?
Yes.
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SmileyFace
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Re: Credit Cards - cancel or let close due to inactivity

Post by SmileyFace »

UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been initiated by me rather than by the lender.
Why?
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RickBoglehead
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Re: Credit Cards - cancel or let close due to inactivity

Post by RickBoglehead »

Having a card open, whether you use it or not, raises your credit score - because you're utilizing less of your available credit line. Simply put a note on a calendar to use a card once annually to keep it active. I screwed up and lost one of my oldest cards, AT&T Visa(?), with Citi. No warning, just shut, lost points, they would do nothing, really soured me on Citi. I find them a) very inflexible, b) slow to fix system issues, and c) poor in communication.

However, my main cards are with Citi. Costco Visa, and DoubleCash. Fidelity's cards via Elan pay the same as DoubleCash, but Elan has worse systems than Citi.
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shess
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Re: Credit Cards - cancel or let close due to inactivity

Post by shess »

ChrisB wrote: Fri Apr 23, 2021 4:56 pm Two cards are with Capital One that we don't use. Both have very low credit limits so not worried too much about credit utilization impacting our credit score. Credit score is over 800 and we refinanced a few months ago so have no plans to open any sort of accounts where credit score would be a worry.
If you're in a position where credit score won't matter for awhile, I'd cancel them intentionally to make sure that any changes it does cause get ticking, rather than waiting a few months. That said, credit score is a tool, I honestly don't spend any time at all monitoring it or worrying about it. I worry more about whether I should worry about my kids' credit scores, honestly.

We have a couple cards we leave ticking over with minor autopays to keep them live, but in a later comment you mention 8 cards, and IMHO that is more than it's worth worrying about. In fact, this is making me think I should go look at our mostly-idle cards to see if we can simplify.
Marseille07
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Re: Credit Cards - cancel or let close due to inactivity

Post by Marseille07 »

I'm trying to just hold CapitalOne cards; and would let my existing 2 cards closed due to inactivity. My incentive here is to hold onto active credit history as long as possible, as I'll only have 2 new cards left.
stoptothink
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Re: Credit Cards - cancel or let close due to inactivity

Post by stoptothink »

I used to churn, now have a bedside drawer full of cards I haven't used in a long time and never will. I just make sure to regularly use the few that I have a long history with, otherwise I am letting them be closed due to inactivity (2 in the last 6 months or so). The credit hit is miniscule and totally irrelevant for someone with decent credit.
UpperNwGuy
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Re: Credit Cards - cancel or let close due to inactivity

Post by UpperNwGuy »

SmileyFace wrote: Fri Apr 23, 2021 6:02 pm
UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been initiated by me rather than by the lender.
Why?
That's an easy question. The answer is that lenders often close cards for cause, so even if no other detail is provided, a bank looking at your report may wonder why a lender closed one of your cards.
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SmileyFace
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Re: Credit Cards - cancel or let close due to inactivity

Post by SmileyFace »

UpperNwGuy wrote: Fri Apr 23, 2021 6:54 pm
SmileyFace wrote: Fri Apr 23, 2021 6:02 pm
UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been initiated by me rather than by the lender.
Why?
That's an easy question. The answer is that lenders often close cards for cause, so even if no other detail is provided, a bank looking at your report may wonder why a lender closed one of your cards.
If your score is in the 800's and your history shows you haven't used the card in two years isn't the cause obviously lack of activity?

OP: I would just let it go.
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SmileyFace
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Re: Credit Cards - cancel or let close due to inactivity

Post by SmileyFace »

SmileyFace wrote: Fri Apr 23, 2021 7:59 pm
UpperNwGuy wrote: Fri Apr 23, 2021 6:54 pm
SmileyFace wrote: Fri Apr 23, 2021 6:02 pm
UpperNwGuy wrote: Fri Apr 23, 2021 5:37 pm I would rather that my credit report show any closure as having been initiated by me rather than by the lender.
Why?
That's an easy question. The answer is that lenders often close cards for cause, so even if no other detail is provided, a bank looking at your report may wonder why a lender closed one of your cards.
If your score is in the 800's and your history shows you haven't used the card in two years isn't the cause obviously lack of activity?

OP: I would just let it go.
I was curious so just went back and looked through my most-recently-downloaded credit reports. Two of Three do list BOTH "Closed at Consumer's Request" and "Closed due to Inactivity". The third doesn't seem to consistently give a reason (but again, it is likely apparent since on the ones closed you see no activity for a long time). I still can't think of a case where it would make a difference to someone looking to give me an account. If a credit card company doesn't want to give me a card because I have obviously done some churning in the past - it is obvious based upon me opening 3 cards at once and then either closing those cards myself (to avoid an annual fee after first year) or letting them go due to inactivity (in fact - I would think the credit card company would prefer the latter - at least they might collect a fee for that second year). I can't think of why a bank giving me another account type would care since all my cards, including the closed ones, state "PAID/NEVER LATE" telling them I am a good risk.
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Re: Credit Cards - cancel or let close due to inactivity

Post by Jack FFR1846 »

Make sure that each card is auto paid. Take your stack of unused cards and use each one to keep it open. Look into "low balance forgiveness" to make a small amount every month. I make about $7 a month with this for putting 99 cents on each one in amazon gift card reloads.
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jrbdmb
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Re: Credit Cards - cancel or let close due to inactivity

Post by jrbdmb »

i would consider keeping these cards open if they are among your oldest cards, as Average Age of Accounts (AAoA) and the oldest account are a factor in your credit score. Otherwise I don't expect any significant hit to closing them.

BTW, closed cards will still remain on your credit reports for 10 years, so the AAoA credit score hit would not be immediate. But you could take a small hit as your total credit line shrinks a bit and overall utilization rises a bit.
chemocean
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Re: Credit Cards - cancel or let close due to inactivity

Post by chemocean »

During the period of inactivity the cards may be used fraudulently either from an inside job or from a retailer when they were in use.
I would close them to prevent fraud unless you plan on closely monitoring them.
Dealing with fraud is a pain, especially with complex fraud in large amounts. Police reports and Avadavats are often required to resolve fraudulent charges.
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ChrisB
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Re: Credit Cards - cancel or let close due to inactivity

Post by ChrisB »

Thanks again to everyone for the input and information.

These 2 credit cards were used mostly to earn rewards during some larger than usual spending. (Home remodel where we were allowed to pay contractor by credit card without a surcharge AND we bought most of the materials ourselves at contractor cost.) Cards were only open for 2 years so not our longest credit history as we have cards averaging 17 years of history.

As mentioned, I didn't want to worry about potential fraud so went ahead and canceled the cards. Will be curious to see what it does to our credit. Again, not really worried. Creditwise has a simulator that shows my credit score will change take a 1 point hit when I cancel these 2 oldest cards.

Couple less things to manage and worry about for the win. :sharebeer
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ChrisB
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Re: Credit Cards - cancel or let close due to inactivity

Post by ChrisB »

Thought I would post again in the interest of update or follow up in case anyone ever has a similar question.

I went ahead and asked for my 2 credit card accounts to be closed. After they were closed I got a credit update and my credit score dropped... 1 point.

However, I should mention I had forgotten that due to inactivity and possibly concerns during COVID Capital One had lowered the credit limit on both cards TWO times. Therefore, my available credit only moved by <10% and any change in credit utilization was offset by payments made on other debt.

Anyway, there you have it. Well worth the 1 point hit to have two less cards to be tracking or worrying about.
Freefun
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Re: Credit Cards - cancel or let close due to inactivity

Post by Freefun »

I have all my cards set to monthly recurring charges to various charities. This avoids closure due to inactivity.

I make the donations anyway and my cards are autopay, so nothing extra for me to do.

Tons of charities are happy to get recurring donations via credit cards.
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mrc
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Re: Credit Cards - cancel or let close due to inactivity

Post by mrc »

Freefun wrote: Tue May 18, 2021 3:22 pm I have all my cards set to monthly recurring charges to various charities. This avoids closure due to inactivity.

I make the donations anyway and my cards are autopay, so nothing extra for me to do.

Tons of charities are happy to get recurring donations via credit cards.
That's nice, but not the most efficient way to donate. I moved our monthly sustaining member payments from CCs to checking account to reduce the fees the organizations have to pay the CC vendors.
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Marseille07
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Re: Credit Cards - cancel or let close due to inactivity

Post by Marseille07 »

Interesting. I'm planning to just lock my card and shred it after redeeming my statement credit for one last time.

It's my oldest card so I want my credit history to remain open; at the same time, I absolutely do not want to give this bank more business.
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Re: Credit Cards - cancel or let close due to inactivity

Post by iamblessed »

I just cancel the ones I do not need. My score is 775 so it did not hurt me to bad. I have two but only use one. I use the other one once a year. I have even thought about going only to one credit card. But that is another credit card sin also. Along with closing your oldest card. Committed that sin to. I think way to much is made of credit cards and credit scores. For many years I had one card and a good score to boot.
Last edited by iamblessed on Tue May 18, 2021 10:14 pm, edited 4 times in total.
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JoMoney
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Re: Credit Cards - cancel or let close due to inactivity

Post by JoMoney »

I cancel/close cards I don't use. Yes, it does impact my score temporarily... it goes from excellent to a slightly lower "excellent" number *shrug* ... then it starts going back up.
I don't know that it makes any difference, but if the account was being closed I'd rather it say "closed by consumer" or at my request rather than being closed for the banks reasons (regardless of why).
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khram
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Re: Credit Cards - cancel or let close due to inactivity

Post by khram »

RickBoglehead wrote: Fri Apr 23, 2021 6:16 pm However, my main cards are with Citi. Costco Visa, and DoubleCash. Fidelity's cards via Elan pay the same as DoubleCash, but Elan has worse systems than Citi.
I've found the opposite. I usually can't even login to Citi without going incognito. Just get spinners of death. I've closed out my Citi cards, and the only thing I really miss out on is an occasional $25 reward for turning on autopay for a few months. Not worth the hassle of using their website to me.

And the last time I got a Citi card, even after I activated it, they sent me an email every weekday for over a month "Congratulations on activating your card!" Boy was that annoying.
calwatch
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Re: Credit Cards - cancel or let close due to inactivity

Post by calwatch »

I leave cards open but don't make an effort to charge a minimal amount to keep them open. Usually there will be some deal that will generate me to spend, but I have at least three cards (Merrill+, Discover It, and Barclay Arrival) that I have not put a penny of spending on in the past three years. It seems like if you have any account with the issuer, they will let you keep it open, as I have more valuable cards with all three (BoA Travel/Cash Rewards, a classic Discover with rotating categories, and the Aviator card).
scrabbler1
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Re: Credit Cards - cancel or let close due to inactivity

Post by scrabbler1 »

I had a few cards I opened in the 1990s which I hadn't used in at least 10 years by the time the issuers got around to closing them due to inactivity around 2010 in the wake of the 2008-2009 financial crisis, when banks were cutting back on credit. I eventually got down to 2 cards, all I need. One is my main card, a cashback one I can pay easily through my online banking (same bank as checking account). The other is my old, main card (not cashback), relegated to back-up status. To keep the card open without having to remember to do anything, I left one small, automatic, annual charge on it, and I don't carry it around with me. This gives me the comfort of having a reliable card available in case something happens to my main card, without sacrificing any meaningful cashback rewards.
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Re: Credit Cards - cancel or let close due to inactivity

Post by radiowave »

To add a data point:

- I had a BoA non reward Visa card that I had for over 20 years cancelled last summer d/t inactivity, my FICO report dropped about 5 points for a few months then went back up to where it was before.

- I paid off mortgage late last year and my FICO score has dropped 25 points and stayed there.
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