Help! They Closed My Credit Card Because I Didn't Use It!
Reader Kevin is upset with WaMu because they closed his credit card due to inactivity. Had he known they were going to do this, he says he would have been happy to pay a small fee to keep it open, etc. The card is the oldest one on his credit report — and closing it has affected his FICO score.
Kevin wrote an EECB to WaMu asking that his card be reinstated, after a customer service person told him it had been closed because he was a security risk. He cc'd us, let's listen in...
... I have been going through my mail and have discovered that Washington Mutual has decided to cancel my WaMu MasterCard simply because I have not used it and do not owe anything. In essence, since you haven't made any money off of me in the past year, you've terminated our business relationship.
Surprised by this, I called up your customer service a few minutes ago to inquire about the cancellation.
Please imagine my surprise when your customer service agent explained to me that I was seen as a security risk because I had not used my card in a year. Yes, that's correct, if I'm not actively using the card and therefore taking out more money than I can pay back, I'm a security risk.
According to Bankrate's "Dr. Don," a "security risk" isn't exactly what WaMu thinks you are. What you are is unprofitable and hard to predict.
Having an account closed for inactivity is a risk when you play favorites with your credit cards. It's a business decision for the lender. The card provider had an obligation to make an unsecured loan to you at any point in time.... You never took them up on any part of that offer, so they closed the account. It makes perfect sense from the lender's perspective. It freed up the capacity to extend credit to another cardholder that might actually make them some money.
As far as your credit score goes, there's not a lot you can do about your credit history shortening — but if you're concerned about your utilization ratio (how much available credit you have compared to your debt) — you can apply for another card, or ask the your limits be raised on the rest of your cards. Just make sure to use them once in a while. For more information, check out this article from Bankrate.
Good luck.
(Photo: stirwise )
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Discover's finally "threatening" to close my account for inactivity.
I can't wait.
Same here. Providian....err....WaMu....errrrr...Chase, closed my account because I haven't used it in a year. That's true, because it has the worst APR and lowest credit line of the 3 I have.
That being said, it too, was my older card by a few years and I got a free FICO score every month, which is why I kept it around.
Oh well, I went from a 420 FICO to a 760 FICO in under 5 years.
The card and your history with it will remain on your report for several years in a closed status. I believe it doesn't hurt you at all. Granted after a few years it will fall off of your report but your good history with that card is still on your report for now.
I have a Chase card I haven't used in 5 years. For all I know/care it's been closed out. I don't care; what is it, a 20 point hit to my Fico score? If some time in the future I need to secure a loan and I find that the terms hinge on some credit card that was automatically closed out, I'll take my business elsewhere.
If it's indeed closed, Chase just saved me the hassle of dealing with the schmoes in the retention department.
@FromThisSoil: That happened to me too, I have a card that was the first credit care I EVER got, it was from WaMu now its turned into a Citi card.
How does that happen? I'll probably quit using it now though, they just jacked up the interest rate to something ridiculous due to the "economy" I'm sure.
You're better off without them, FICO score damage or not.
I just had the reverse happen. Got a letter from Well Fargo Financial about a year ago stating that they would be closing my CC due to inactivity. However yesterday I just got a letter stating I owe fee's for this year. Haven't had time to call cust service yet. But it sure looks like a "money grab" to me for fees from WFF.
somebody call the WAAAMBULANCE!
All this does is make it harder to get something you shouldn't want in the first place (credit). Hopefully someday soon people will wake up and realize how terrible an effect credit has had on our lives in the last 50 or so years.
that sucks. You take the hit on your FICO score on lower available credit, and a possible hit on getting closed, and then if you want the card back your score takes another hit for the inquiry. And that's a green card with no history, so that can't help much.
I have a card that I rarely use, so I put my internet bill on it and it gets charged on a monthly basis. It's an easy way to avoid these incidents.
I work in customer service for a national chain that uses GE Money Bank to fund the "in store" credit card. Any accts that have not been used in the last year are being closed. In addition, accts are being closed and/or the credit limit severely reduced if a fresh credit review reveals any recent delinquencies in the profile, even if the customer has a perfect payment history with our store card. They call it the new "risk mitigation strategy". This is happening across the entire GE Money Bank portfolio, Sam's, Walmart, Old Navy, etc. I recommend checking the status of your acct before you attempt to do any major shopping because the letter notifying customers of these changes is mailed after the changes have been made.
@Corporate_guy: I think you missed where WFF said they canceled the card? Now they have magically re-opened the acct to suit their need for FEES. Total suck.
@bagumpity: Credit's been awesome for me, actually. With credit cards I can keep track of my spending, figure out a lot faster where my money is going versus when I use cash. I mean, I walk around with $20 and when it's gone, I can't remember where it went. But with that $20 charge on my credit card I know where I went and what I purchased. and I don't have to deal with spare change everywhere, and I get cashback, which is amazing because I take the money and put it into savings, so it's like $200 that I got as a bonus for doing the things I regularly do with my money.
They did the exact same thing to me. I called and asked if I could roll it into my other Chase Credit Card, but no dice....once it's closed that's it. Would have been nice to get a letter saying they were going to close it to give you a chance to do it on your own.
FUCK Credit scores, fuck their history and fuck credit cards. They are unnecessary black hole traps, layers of abstraction on transactions that makes money without labor for some assholes.
It's all fantasy man! If someone doesn't want to sell me something because of my credit history, I don't want to do business/transaction with that person. Personal trust and humanity is key to business. Save your money!
All CC companies are doing it. If you aren't using the card, it screws up their credit sheets.
WaMu did it to me last week as well. Luckily, it was an old card with only an 8800 limit. I never used it because the limit was so low. I have several other cards with 20k-30k limits, so I use those to keep debt ratio down. Of course, I don't normally carry a balance. I do carry a small balance once a year to help my FICO score. If you never carry a balance, it looks like like your card is unused to the credit agencies. When WaMu close my card, my FICO dropped only 7 points. it should bounce back next month.
The exact same thing happened to me. It was Citi though. Super bummer but on the bright side, at least we're not using credit to pay for things we can't afford.
My credit card (from Chase) has a $2,900 limit, that I had maxed out unit about September, at which time I paid it off in full, in one lump sum. Yesterday, I received a letter from Chase saying that they wanted to keep my business and were offering me a 0% interest rate until January 31, 2009, after which I would receive a 4.99% rate until 2010. The letter said that they wanted to keep my business, and are hoping that I use my credit line. This is my only card, and I carried a rather large balance on it up until recently. Has this happened to anyone else?
BOA has sent me the second letter in 2 years asking for me to accept and increase from my 7.99% Fixed interest rate to (this year) 16.99% Floating. I have once again sent them the letter rejecting it, and I'm on the hook if I use the card.
I did call to ask if the old rate increase was still in effect so I could use it once or twice to keep this from happening, but the Rep told me she see nothing stating that. I'm Hoping they don't cancel it.
Funny thing is, they commissioned a Poll thru MLB asking about if I'd have a card with my Baseball team on it. Knowing who it was for, I tanked my answers.
In Canada (where I live) I think it is little different, when you apply for a loan or a mortgage they look at your income, your debt and the amount of debt you can possibly get into. So having a credit card canceled is a good thing, it means your ratio of debt to income goes down. The banks will not allow you to borrow more than you can pay back with all your credit maxed.
@TheBursar: I do the same thing -- run up charges on it to about $100 then make minimum payments each month. I give them a little interest I guess but it's worth it for the credit score monitoring I think.
Just be sure to pay on-time.
Use the card every 3 months then pay it off. It keeps your credit line open and active. They "security risk" he stated is just total bs.
I have more sympathy for the people who are getting their credit limit cut while being on time with payments.
@bagumpity: You're assuming that credit has a negative impact for everyone, if not the majority.
I can safely tell you that there were and still are people (that doesn't work in the financial industry) still thriving because of credit.
@elloGov: I'd agree with you, except it's really hard to rent an apartment these days without undergoing a credit check. They'll rarely outright refuse you due to bad credit, but they'll charge you a huge security deposit. In my current apartment I had to pay first and last months rent, *plus* several hundred in security deposits, because my SO has a short credit history.
Perhaps the "security risk" was referring to the risk the card holder had by having a card that was being unused for that long. If the card hadn't been used in over a year, the chances it would be lost or fall into the wrong hands increases.
I had a card canceled recently after two years of inactivity and wondered what took them so long.
Wamu reduced my $0 balance (never had one) HELOC last week. If Congress gave them stiumlii to keep lending, Congress should check to see what happened with that money, 'cause Wamu ain't lending.
My parents love to tell the story about their first credit card, which they obtained to ease car rental on our first big vacation. It was canceled, and when they called to ask why, they found it was due to inactivity. The issuer suggested buying a pack of gum each month with it, then paying it off immediately in order to keep it active.
@elloGov: Credit histories are very important. Credit scores are tumorous abominations of a bloated, contaminated system that are way too overly abused.
@Orv: Additionally you have to have a somewhat decent credit score for some federal jobs. Say you are hired for a job in purchasing which requires you to be a government purchase card holder and the issuer rejects you (it can and does happen) then guess what? You just lost your new job, the credit card was a requirement of the position.
Granted that does not affect everyone but it just shows you how far reaching those scores can go. Some GS grades have a mandatory background as well as credit check, the reasoning is that you'll be in charge of lofty budgets. (Insert wasted funds speeches here... that's another story.)
@bagumpity: What a clueless comment. By all means, let's not have credit cards. Let's not have car loans, mortgages, or student loans either because those are credit too. I'm sure we would have a thriving housing market if everyone just paid cash up front for their homes.
@CFinWV: Not just that but a lot of those government jobs that require clearance do credit checks to make sure you aren't living beyond your means. They feel that if you live beyond your means, you are more likely to sell secrets if you're in a financial bind. And if you have SCI, you have to list all your loans, credit accounts, etc. for a yearly financial disclosure for that same purpose.
So if you have credit, but a bad score, you can lose your clearance (and subsequently your job) for being a security risk.
@insideedge: We do that here in the states too. Banks call it a debt-to-income ratio. I'm not sure if it's tied into lending laws, but when I got my mortgage for a house this summer, debt-to-income was one of the qualifiers.
@elloGov: If someone doesn't want to sell me something because of my credit history, I don't want to do business/transaction with that person. Personal trust and humanity is key to business.
That's a fine sentiment, but most of the business entities you will ever find yourself dealing with are both impersonal and inhuman. Ergo, your credit score and history is how they decide how much to trust you.
Credit card companies make money of the interest you pay. If you do not carry a balance and pay interest then you're an expense with no reward and they *should* drop you. If you want a card that rewards sound financial behaviour then get an American Express. There's a fee but they have benefits like extending warranties and such.
Funny story: A friend, who had only 1 credit card but had not used the card in 2 years, took a 100 mile trip to the beach. He figured he would use his credit card to pay for the hotel room. He brought only $80.00 in cash. He gets to the hotel, gives the front desk clerk his card, she comes back and says the card was canceled 8 months ago. Now, he doesn't have enough cash on him to pay for the hotel room, eat and pay for gas to get home. So, he turns around gets in his car and drives right home.
@SabreDC: So help me to understand, why would someone be mad about having a credit card they don't use cancelled. In Canada that would help your credit not hurt it. I make sure if I am not using a credit card I cancel it and erase it off my record.
You are a security risk because since you do not use the card, you get no statement. Someone claiming to be you, changes the billing address, orders a bunch of stuff, and you never know. This happened to my aunt with a store card, I think JC Penney. She had no clue until the bill collectors called her and asked when she was paying.
@insideedge: It affects your history. The longer you have a credit card and have been in good standing with it (little/no debt, pay if off in full, not racked up a ton of charges you couldn't handle, etc.) the better off you are in terms of how you look to potential lenders. When lenders see that you have maintained good credit for a long time, they are more likely to give you money. If the card is canceled, that negatively impacts your history as it is no longer relevant to your history and you can't use that to point out how awesome you've been with your money.
@axiomatic: Sounds like they never closed it. Hopefully you have their letter. Because they are not going to believe you if you claim they said they closed it. And yes, it does sound like they scammed you good. I did misread it the first time.
Yep, poor credit risk due to lack of predictability.
It don't make sense, but it does.
@JiminyChristmas: Thanks for making my point for me. And yes, we would- it would just take a lot of adjustment. Sadly, it will never happen.
What the others said. They're saying it's a security risk if the account is left open and unused for a year. It's *not* that you didn't charge up more than you could afford to pay back (c'mon, we all know better than doing that, right? and yet we keep our cards).
We have a similar situation. If an account has been idle for a while, and suddenly starts getting used, we flag is as potentially fraudulent. It may be that someone guessed or copied the password from the original owner, and is now attempting to run up charges on his account.
You should be glad they care about this sort of thing. However, that said, they should have attempted to notify you in advance. Moral for the rest of us: use your cards periodically, and maybe stop being slaves to the FICO.
@Orv: And if you are someone like me, a freelancer with little or no verifiable employment, a stellar credit score will get you an apartment no problem.
If you do not use a card for over a year what do you think is going to happen? If it had been three months I could see being upset but a whole freaking year? This person has no right to complain, at all. I have one card that has a very low intrest rate on it and I have not used it in a few months. I'm going to use it next week for some gas just to make them happy and I don't lose a card with a great intrest rate.
I've worked to hard to rebuild my credit to lose a great intrest rate because I was not using their card.
Oh, I'm sorry. I thought I was supposed to stop using my credit card; that I was irresponsibly damaging my credit if I didn't freeze my CC in a bowl of water so that I could never use it for anything but emergencies, ever.
It's funny that it's always the consumer's fault for having done the wrong thing, no matter what they actually do.
Me too.
No warning, they just closed my account.