Here We Go. Shutting down lines of credit.

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SoCal78_IHB

SoCal78_IHB

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I received a letter in the mail today from Chase. I have not used this credit card in a very long time and it has had a zero balance. The letter advised me that if I do not use the card by Nov. 20 they will cancel my account. (My credit rating is 760 last time I checked so it's not because of anything fishy going on with me.)



My friend said he also got a letter this week. (Not sure which bank.) It's been just a couple months since he's used his credit card. They did not give him a choice. The letter said his line of credit is being cancelled immediately.



... and so the cookie crumbles...
 
I got the same thing from 2 of my cards, Citibank and Chase. I never use them and just never wanted to hasle to close them out. My credit score was high 7's as well.
 
I have the same question, if I have a credit card that I haven't used and didn't cancel because I didn't want the credit ding that comes with canceling a card, will I get dinged anyway if the company cancels it? Any answers anyone?
 
Yes, by canceling a credit card, whether your choice or not, may effect your credit score. Part of your credit score is determined by your debt utilization. Or how much credit you have and how much of it you are using. So for the sake of simplicity, lets say you have 4 credit cards with a total of $10k spending limit.



Your credit score is hardly impacted if you show a total balance of $2500 or less.



Your credit score does get impacted if you show a balance of $2501-$5000.



Your credit score gets dinged if you show a balance of $5001-$7500.



At $7500 or more really impacts your score.



Now if your $5000 credit card gets canceled, and you have over $2500 in debt, then you just got dinged for not being an idiot. Gotta love credit card companies, they really know how to shoot themselves in the foot.
 
Closing credit cards will ding your credit if the credit cards are some of your longer lines of credit.



It will also hurt your credit if it raises your balance percent

A large balance on an account, or balances on many accounts, is a sign of a consumer who may be having trouble paying back debts. Since the FICO score measures the chances a consumer will pay back a debt, larger balances or balances on more accounts can lower the score.
 
had this happen too but called customer service and managed to get them to keep the card open. the cc companies are house cleaning on a massive (automated) scale but if you get an live acct mgr on the phone maybe they can keep it open.



its a good thing i rotated some my cc usage although i originally did it for a slightly diff reason. for ex one of my cards i stopped using is also which is also a gas card and didn't realize there was an annual fee if i didnt use it gas up X times a yr. i was able get them to waive the fee with the ol' "i'm a good long-standing customer" act. with that particular card i havent used in forever but the same line managed to work somehow.
 
[quote author="ABC123" date=1223673580]If they haven't closed it yet, just make one charge on it and they will keep it open.</blockquote>
I've actually had credit cards before and then a few months later it got used by accident. The credit card company didn't deny the charges - they just re-opened the account and let the charges go through.
 
WAMU did this to me a few months back. Here is a story of how the credit crunch is terribly affecting Main Street. My husband's best friend works in the family business moving and storing furniture, particularly for interior designers. They had a slow month and asked their bank to raise their credit line. Not only did the bank say no, but they also cut the line in half, so now they can't make payroll this month.
 
Yep, I recently tried to purchase a property. The agnecy wanted approximately 50% for down, I was offering approx. 30%.



No credit issues as of yet, but i'm sure its coming. I just paid off a nagging high interest card.

goodluck

-bix
 
[quote author="biscuitninja" date=1223675615]Yep, I recently tried to purchase a property. The agnecy wanted approximately 50% for down, I was offering approx. 30%.



No credit issues as of yet, but i'm sure its coming. I just paid off a nagging high interest card.

goodluck

-bix</blockquote>




Underwriting standards have changed to reflect the lowering of overall leverage.

In addition, they?ve increased the focus on a borrowers credit worthiness.
 
Thread bump. They're getting serious with this stuff. I got a letter from Chase today. I figured it was a notice that they had reduced my credit limit. Nope. They cancelled the account. No warning at all. It was my oldest credit card, and about 1/4 of my total credit limit. If this impacts my credit score much I'm going to be a bit peeved.
 
You may want to contact them and see if they will keep it open. When WAMU was closing mine, they said it was partially due to the fact that I don't use it, so I could keep it open if it sent them a letter.
 
[quote author="Daedalus" date=1228215100]Thread bump. They're getting serious with this stuff. I got a letter from Chase today. I figured it was a notice that they had reduced my credit limit. Nope. They cancelled the account. No warning at all. It was my oldest credit card, and about 1/4 of my total credit limit. If this impacts my credit score much I'm going to be a bit peeved.</blockquote>
I also got a letter from Chase, I have a $1,800 balance because I used a 3.99% fixed for life balance transfer offer years ago and I've been making the minimum payment due to the low fixed rate. The letter indicated that my minimum payment will be increased from 2% of the balance to 5% of the balance.
 
Lines of credit have been getting slashed for some time. Take a look at American Express, they are shutting lines of credit due to new regulations and a way of lowering their own risk exposure. I know numerous individuals that have had their lines of credit yanked. For example one has nearly perfect credit, no missed payments and a credit limit of 35,000. He received a letter saying they are lowering it to 7,500. Another I know went from 15,000 to 2,500.



This is happening all around and will continue to happen. I think there was an article saying that over next 18 months, 2 trillion dollars are going to be pulled. Think of this as a 2 trillion dollar blow to our already low consumer spending situation. Job losses + lines of credit are main sources of income for people. Now that people are losing both...look out below.



This is why I've had February 09 puts on American Express and Capital One. My price target for American Express is 3 a share by early next year or BK.
 
Credit or debit card is evil. You can't keep track of the amount spent. It does not alert you when you've spent too much. You are always a month behind with the figures.



This may be a little more work but it helps me staying out of trouble. I purchase several visa gift cards of $500 each from the bank and I used them until the amount is depleted or denied at the cash register. I get embarassed then I go into buyers remorse.



I also remind myself daily here that I am a BK shopper.
 
[quote author="Daedalus" date=1228215100]Thread bump. They're getting serious with this stuff. I got a letter from Chase today. I figured it was a notice that they had reduced my credit limit. Nope. They cancelled the account. No warning at all. It was my oldest credit card, and about 1/4 of my total credit limit. If this impacts my credit score much I'm going to be a bit peeved.</blockquote>


Of course it impacts your score. But then you did it to yourself. So, unless you like being peeved at yourself why waste the energy?



Is it that tough, people, to keep a card active with a simple monthly charge that gets paid fully each month?



Three credit cards in my name and depending upon which company offers the best rewards for my situation (currently AMEX Blue Cash), I'll drive all my purchases through that card to maximize my benefit and auto-debit the full balance at the end of the month. The remaining cards are set up with auto-credits and respective auto-debits to avoid the banks' "inactive" queries. Surely you have a monthly cell phone bill, cable bill, renter's insurance... something... in order to automatically make a small charge on each of your credit cards. [<a href="http://www.youtube.com/watch?v=sGSRmemHxlo">And, yeah, I know: Don't call you Shirley.</a>]



My finances have been hands off for years.
 
[quote author="usctrojanman29" date=1228217444][quote author="Daedalus" date=1228215100]Thread bump. They're getting serious with this stuff. I got a letter from Chase today. I figured it was a notice that they had reduced my credit limit. Nope. They cancelled the account. No warning at all. It was my oldest credit card, and about 1/4 of my total credit limit. If this impacts my credit score much I'm going to be a bit peeved.</blockquote>
I also got a letter from Chase, I have a $1,800 balance because I used a 3.99% fixed for life balance transfer offer years ago and I've been making the minimum payment due to the low fixed rate. The letter indicated that my minimum payment will be increased from 2% of the balance to 5% of the balance.</blockquote>


Nice. I have a 2.99 with them that is still at 2% of the balance, but I guess I can't count on that. 2% to 5% is a big increase.
 
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