UNUSED Charge cards COULD Decrease your CREDIT SCORE

A standard practice by banks to cancel inactive accounts could cost consumers a lower credit score
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When Chase unexpectedly closed down Kevin Hicks’ credit card, his credit score fell by 60 points.

“My credit history with them was 12 years,” said Koslicky. “Once they canceled my card, the system looks at your next card that you've opened and that’s only four years.”

Not only did closing his oldest card decrease his credit rating, but with its $23,000 limit, closing it significantly impacted his debt to credit ratio.
So, he called Chase and was told the account was closed due to inactivity. He hadn’t used it in months.

“In the wake of the financial meltdown during the last couple of years… they’ve been cutting credit cards across the board,” said Jacob Gibson, with the financial website NerdWallet.

Gibson says prior to the Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD Act, banks were allowed to charge customers for the privilege of carrying unused credit cards, but since they can no longer charge, they’re reluctant to keep those inactive accounts open.

“They are definitely in the business of penalizing inactivity,” said Gibson. “They don’t want you to have one of their cards that you’re not likely to use because they don’t make money.”

His advice, if you have a card with a high limit or long history, utilize it for small purchases every so often. Also, evaluate the standard 45 day notice banks should send before closing the account.

“If you get this notice, you just need one charge to keep your account open,” said Gibson.

However, Koslicky says he never received that notice from Chase.

“The idea that you’re indeed being responsible looking to develop your credit and not use your old cards, and that they’ll come along and systematically terminate these cards, that’s pretty devastating

While Chase wouldn’t discuss its policy on eliminating long-standing, non-delinquent accounts without notice to the customer or thought on their credit history, they said “it’s standard for the banking industry and nothing new.”