Chase may close your card after it’s been inactive for a year. I’ve read about this in the past, but never bumped into it myself until now. I have a Freedom card that hasn’t gotten any use for a year as none of the quarterly categories have worked for me recently. Chase sent me a snailmail letter informing me that the account will close when the card expires next month.
The letter was sent in the mail just over a year since the last active statement. The letter states further that my using the card will not avoid the card cancelling, but they suggest I call in to explore possibilities if I want to keep it open.
Calling in was super easy. I just informed the rep that I wanted to keep the card open, and she processed that immediately without any questions or comments.
Sounds to me like if your card is not set to expire soon, this issue won’t arise; that’s probably why I never bumped into it before. Further, I’d guess that any card that has an annual fee will not have this issue. Overall it’s a pretty niche thing, but worth knowing about. You can preemptively avoid this issue by ensuring your card remains active with a small charge on the card, e.g. $1 Amazon gift card or $.50 Amazon reload.
I recall reading about card accounts that were closed with no notice. That may be the case with other issuers, but in Chase’s case they gave me notice with the letter which made it easy enough to deal with.
And, yes, I promptly went to buying $1 Amazon gift cards on various inactive cards. 🙂
I had my Slate card closed last year for non-use and the letter said that I could not dispute it. I also got a letter about my Amazon card and that one said that using it would keep it open, so I just used it once. I was a little upset about the Slate card closure because it was around the time that they had started testing the Chase Offers that only worked on that card and a couple of others that I did not have (and ironically had used the card on a couple of offers after the letter was sent). But then the program ended and now it’s available on all cards so it didn’t really matter.
I guess I should make sure that I use my Freedom Unlimited for a small transaction to avoid having it closed. My 3 regular Freedoms get regular use due to 5% categories like gas and groceries.
There’s an easy way to avoid automatic card shut offs: every month a small charge appears on the cards I’m not actively using. Small because it shows the card company that I’m still using their card & when it comes to paying it off, it’s one I can pay the full balance due with ease.
Have a bad week and don’t make as much as you usually do – still be able to pay it off on full which looks good for credit score, credit company will see that it’s in use. Usually, that also encourages them to increase the line of credit. Also, your payment isn’t going towards interest accumulating, no revolving balances & best of all – you still have your backup credit card for emergencies when you need it.
If “using the card will not avoid the card cancelling,” then how does buying a “$1 Amazon giftcard” accomplish that? This is a little misleading…
I’ve updated the post to clarify this.
Barclays has started closing accounts due to inactivity before even bothering to send notifications. Both my partner and I have had cards cancelled in the last week, and they are refusing to reverse their decision.
I’ve been closing all my old cards just as a matter of security. I don’t care if it has a negative impact on my credit.
Please explain the “security” issue. I have 30+ credit cards and have no plans to cancel any of them.
I believe moving points between UR accounts will trigger a statement. I went back and checked my Freedom Unlimited account and I had a statement generated for a point transfer between UR accounts in January 2019. My card expires next month. And my last actual credit card swipe was February of 2018. I have so far not received a cancellation notice.
This subject has come up many times at the myFICO forums. A few quick thoughts to start with:
* Yes, closure due to inactivity happens to almost all cards that have no annual fee.
* Different issuers vary their time windows.
* Many issuers will close without giving you warning.
* Even with a specific issuer, their back end algorithms have triggers that are hard to pin down. There will always be weird outliers where a person will not use a major credit card for five years without it being closed. It’s unwise to expect you will be this lucky. Better is to err on the side of being less lucky (more about specific recommendations below).
* Closure is only one example of AA or Adverse Action. Even more common is a Credit Limit Decrease (CLD).
Here is a summary of current wisdom for avoiding CC closure due to inactivity, based on what we have seen over at myFICO.
* Always activate a new card within ten days of receiving it.
* Always use a new card for at least one purchase in the first 50 days.
* Major cards (Visa, MC, Discover, Amex logo): using it once every 6 months should protect you 100% against early closure and most AA.
* Store cards (no major logo): once every 12 months should be safe.
Note that the strategies above go a bit overboard from what you strictly speaking might need. Past data seem to indicate that most closures due to inactivity happen in the 13-18 month range for major cards (with some cases being reported of a card staying open for years without being used).
And for store cards it seems like two years might even be safe (possible exception of store cards that are typically used frequently, e.g. Target).
Cards with annual fees are much more rarely closed due to inactivity, though CLDs could always happen.
Finally, do bear in mind that purchases you make to keep cards active should be for things that you’d buy even if you had no credit cards at all. A common piece of advice on credit discussion forums when this subject comes up is often to “just buy a pack of gum or a cup of coffee.” That makes sense only if you love gum or coffee. Otherwise that $3 cup of coffee is really just an annual fee.
Far better is an Amazon reload (if you use Amazon), groceries, gas, utility bills… etc. In short something you are certain you’d pay for even if you had only debit cards. There are tons of strategies out there that are easy to implement and which don’t involve buying stuff you don’t need. The exception is store cards: it’s very hard to buy stuff you absolutely need in a painless way with a Neiman Marcus card, for example.
This happened to me with store cards. But I’ve always put spend on cards I don’t really care for but I don’t want to lose. Like when it’s time to put gas in my car I’ll do say $15 on one and $15 on another. All in the same day. But now I’ll add business cards to the list as well.
This article is good for posterity, particularly when someone totally spaces out with a card issued from this particular lender.
But, seriously, it’s just common sense to use all of one’s credit cards — a bit more regularly than a whole year at a time.
Banks have been known to rescind credit lines to customers that don’t put those lines to good use, pretty much since the beginning of lending; and, it makes perfect sense, if you are a bank, to only continue to lend money to people that will actually use it.
Fortunately, anyone can pretend like they’re utilizing any card, in any fashion, by either buying something and returning it, or just grabbing a pack of gum, or a soda, from time to time. This stuff is not rocket science.
For example, every few months, I use my well seasoned gas card (that has very basic rewards) for 1 or 2 bucks, whichever I can nail down on the meter. But, then I proceed to fill up — with my actual 5% gas card, or my 4.5% card. It only takes 30 seconds to put the pump back and put another card in.
Other cards can be setup on pretty much any small dollar charges; or someone can simply sit down and pay a bunch of bills with various cards – all at once. The actual cards never have to leave the house, nor be swiped. Most of this can be done online.
However, if you want to keep the elite level travel cards in your good graces, than only buying a dollar french fry at McDonald’s isn’t necessarily going to leave them with a solid impression of your capabilities. Furthermore, there used to be a retail blacklist that Amex used to identify struggling borrowers; and reportedly McDonald’s, and Walmart, used to be on that list.
So, do yourself a favor and take your nice cards out on a nice date, every now and again. You’ll thank me for it, later.
Doc has made more than one thoughtful post on this thread. All very thoughtful.
I have a more detailed post on this subject below.
I guess cars like Hyatt with the annual fee aren’t effected by this. Just keep the Hyatt cards for the free night,