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Why Are My Credit Cards Being Canceled?

In today’s economy, credit card companies are changing interest rates at whim (at least until the new credit card laws go into effect…in July 2010. Way to go Federal Reserve, nothing but speed for you guys!), changing their terms and conditions, and canceling or closing accounts, all in an effort to control their debt load. Too bad they didn’t think this stuff through when things were going fine, heh? Anyway, because of these moves by them, you might soon find an inactive credit card account of yours closed – through no fault of your own. And this could ding your credit score a little bit, which is not something you really want to happen right now in case you needed credit anytime soon. So how can you stop your card accounts from being closed?

Simple – use them once in a while to buy something small.

Buy something like a pack of gum or a tank of gas, and then pay it off through online banking when you get home. That’s how I do it! I have, if memory serves me, 7 open credit card accounts right now. Most of these I have had for years and years (the oldest is from 1993), and all but one of them has a $0 balance on them at all times. The one that doesn’t is the one I pay all my bills with every month, which is a rewards credit card so I can at least get something back. But my unused cards are all bundled together with a rubber-band and kept in the small fireproof safe in our house, with all our other important stuff. Every few months, I pull all those cards out and go on a spending spree for a few days – a pack of gum here, a cup of coffee there – and then they get tucked back into the safe. I then log on to my online banking account and pay the balances on the cards I used to get them back to $0. This way, my account stays active, current, and retains its $0 balance while staying away from the dreaded “inactive card” department at the credit card company. So do yourself a favor and keep your accounts active by following this simple tip – it helps your credit score and it lets you keep all your available credit – which you might need if things continue the way they have been going lately!

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Comments (4)

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  1. fitwallet says:

    I learned this the hard way when my credit line on an old account got slashed in half a few weeks ago. Yikes. Luckily, it was my smallest credit line, but my credit score still took a ding. When I pay off my remaining two cards (almost there!), I’m going to use this approach for sure.

  2. WaMu already canceled my card. I knew that was a possibility but since it was my newest card and I didn’t see myself ever using it on a regular basis again I decided to just let them cancel it rather than charge something small to keep it open. I’m not worried about the ding on my credit score.

  3. Craig says:

    I read the same thing earlier this week. People have had old cards canceled so the card companies can save money. The ironic thing is people would hold onto old cards and not charge anything as a way to establish and work on getting better credit, no canceling the cards may end up hurting them.

  4. Jane says:

    I actually had this done to me a 1 and 1/2 years ago. My limit went from $6000 to $500 so I ended up canceling it and getting a new one. Lucky for me the card wasn’t “that” old, maybe 4 years, and I had gotten it as a specific store card for several large purchases at the time and they “upgraded” me from their store card to the rewards Visa. I only kept it in case I lost and or my wallet got stolen and had to go on a business trip right away. (It happened once my wallet was stolen on Sunday, I went out of town for the week Monday morning.) I ended up replacing it with an Amex from my bank, (already had a M/C from there) that now has my monthly credit monitoring service billed to it so there is a once a month charge for a whole $5.50 on it.

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