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Jul 02, 2008 -- Cycling your unused credit cards back into the mix
Many of us have what are called -- in credit card lingo -- "back of the wallets." These are the cards we hardly ever use that may be buried somewhere in our wallets or in a drawer at home.
The typical American has about a dozen cards, but only 2 that are used frequently. The rest of those cards are ignored until they go dormant. In fact, you may not even activate the new card when you get it in the mail.
Banks used to just let these dormant accounts sit and hope you'd someday use the card again -- but not anymore. Now if an account goes stale, they'll close that account. That hurts your credit score and limits your access to funds.
So you may want to consider using your "back of the wallets" twice a year about 6 months apart. Charge a nominal amount and then pay it off. That will keep these accounts current in your credit mix and raise your credit score.
This is not just a silly assignment. You'll be helping your score, which is very important in getting lower interest rates, securing job offers and more.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
not approve for new credit card even if I got good credit history
My credit history is outstanding , but I was not approve on a new application for Visa at my current bank. They stated it was base on Credit ratio. Does any one know exactly what that meant? At one time in one year every year, I paid off my full credit loan balance out of my pocket. Does that seem to help or make it worse?
Bank of America decreased available credit and falsified why.
I received a letter reporting they were decreasing my limit based on my recent payment history and an adverse credit report. When I called to find out why they sent this letter the customer service rep reported my payment history was "excellent," and transfered me to a credit analyst. The credit analyst would not talk with me until she had some "additional information," specifically if I was employed and my income. After I gave her this information (I have been continuously employed 13 years and am in the middle of the middle class income range I think) she said I didn't have enought income to qualify for my existing credit and reduced it even more. She had to go back a year and half to find a late payment anywhere on my account. When I argued the point with her she would not acknowledge that at least half of their justification on the letter was false. I'm a healthcare professional. If I falsify information about a patient in a chart that is lying and I can be sued for that and loose my license. What about credit card companies?
ExxonMobil Mastercard
I have an ExxonMobil Mastercard from Citibank, which I don't use often since I now "shop" my gas.
I cannot convert this card to anything else.
Is it worth keeping it open ($11,000 limit) by using it a couple of times a year, or should I let it lapse?
I have three other bankcards with total credit limits of $94,000.
Closing Macy's Credit Card account.
Received a letter from Macy's that stated "interest rate for this account is now 22.9%. Call this number to opt out of this account". So I did yesterday it had a $0 balance. Will opting out of this will affect my good credit score? Can this be true?
credit cards
This completely confuses me. I have had a United Mileage Plus Master Card for years. I would like to get rid of it and replace it with an AMEX Delta Sky Miles card. Will doing this hurt my credit? It makes no sense to me. I have always paid my bill on time, and do not understand why this would adversely affect my credit. I don't want to have both cards, and pay two annual fees. Any advice?
Credit cards
I'm cutting up all my cards! Good riddance!!!
Credit Scores
Listening to your show yesterday, I heard, AGAIN, the most rediculous nonsensical advice yet. How is it possible that your credit score is adversley affected by PAYING OFF & CLOSING a credit card account? You stated that paying your bills ON TIME counts for 35% of your credit score. It should count for 90%. What is more important than a history of paying your debts on time? How can you be penalized for not using a credit card sent to you unsolicited and unused? We are living in a bizzaro world not influenced by the laws of REASON! I and many, many other of my fellow Americans are no longer spending beyond our means and paying down debt. There seems to be an effort afoot to try to force us to borrow & spend. It's NOT going to happen. If I can't afford to pay cash for it, I will simply live without it. We have too much crap already!
credit accounts closed
I RECEIVED A MAIL FROM GE MONEY THAT READS WE HAVE CLOSED YOUR ACCOUNTS.THIS CARD WAS PAID OFF.I NEED ADVICE SINCE GE MONEY REPORTED THAT TO EQUIFAX. PLEASE HELP
to cut up or not cut up
I'm confused. Clark says to pay off a credit card ,then cut it up. and hr also says to save those cards and use them twice a year. Which is correct?
Closed account also
I heard on your show about using these credit cards we hang on to "just in case" once in a while, but did not take it to heart. Sure enough, received a notice in the mail today that my $25k limit account has been closed due to inactivity. No notice, no nothing, just done. That is really going to impact our debt ratio. Very unhappy they don't give notice before closing the account. And wishing I had listened.
Closed account
Read this info a little to late. Received a letter this past weekend closing a GE Money (store credit account-Mastercard) due to inactivity. The letter stated that a statement would be placed on my credit report-Account Closed by Creditor, thus affecting my credit score which was 825.
Credit Cards
I do not have ANY credit cards and do not want any. I had more than twenty at one time. I have come to the conclusion all bankers or crooks. Only stupid people have credit cards that includes you Howard.
closing
Clark, I had great pleasure in closing a Master card. I had not used it in years and thought it should close. The card manager danced and danced on why I should not, but stayed the course. It feels great just to say no!! so many times.
Kauffman Tire
Actually, I had this account for at least 2 years for purchasing tires only. Just noticed that the company closed my account bc it hasn't been active in a year. My problem with this is that this is a credit card for tires, therefore it should be obvious that people would purchase tires at least once a year. When I contacted the 1-866 number on the back of the card the supervisor stated that she would not mail me a letter stating that they closed the account but that they would mail me a letter stating that the account was closed and in good standing. Either way it goes, I'm noticing that these credit card companies are getting rude and down right no customer service. I will not apply for another card with this company. Just wanted to inform everyone that this is crazy.
"back of the wallet" credit cards
Thanks Clark. I have dug out my old cards and will use them to buy a hamburger....pay them off....and then wait another 6 mos.! thanks for all you do for us!
To L Mitchell - AMEX is a CHARGE card not a credit card
The regular American Express cards (not the Blue) are CHarge cards not credit cards, because you must pay at the end of the month. This is probably why your credit was not affected. This does not hold true for credit cards, where you can pay only the minimum.
Cancel a Credit Card
Clark, We just canceled a Joint credit card with American Express. The fee was going to be $150.00 a year, but we opted to get the 'Blue Card' at no charge. I had told my wife that you said canceling a card would hurt your credit score. She specifically asked the Amex Rep. if this was true, and she said NO. Now my and your credibillity is shot!! Whats up Clark??
card cancelled
Bank of America CLOSED my credit card account, balance ZERO, limit 10k, because I hadn’t used it in 12 months. I called to ask them why, and please can I have it back, and they said NO! I am self employed. That was their reason why they wouldn’t reinstate. Not the reason that they closed it in the first place, but the reason that they won’t reinstate.
They admitted that it is their policy to close accounts without written notification. They also said that it had nothing to do with my credit score, just that I had not used it in 12 months.
Well, now I know. Now I have no safety net. If I apply for another card and don’t get it, my credit score goes down. My score goes down anyway because they closed the account. My score also goes down because of the lack of available credit I have NOW as a result of losing this card THAT I NEVER USED.
Lesson learned. Don’t fall into that trap.
Use it or lose it.
Canceling credit cards
Why is it bad to cancel credit cards after they are paid off?
credit card cancelation
Will it hurt my credit rating to cancel my credit card? It has 0 balance.
back pay
I won a federal arbitration this past week and was awarded $115,000. in back pay plus benefits and seniority status. How can I limit my tax hit for this year since my tax for 2007 was limited income and for 2006 it was just about half my income?
FICO and CREDIT UNIONS
Try getting any meaningful loan from a credit union - they look at the FICO as well. Clark is spot on - nurture your score unless you live in a cave with an M-16 and are awaiting the red invasion. Get with it people!
SCOTT
No, Scott - you're not stupid, merely uninformed. Your score is tabulated by a variety of factor one of which is how much AVAILABLE CREDIT you have. Now, Scott - go forth and be educated (Ggaawwddd...)
Damage to Credit?
Perhaps I'm just too stupid to understand this but why would not using a card and letting the card company close the account damage ones credit?
Millennium Bank
The Millennium Bank in the West Indies offers a 8% interest on thier 5 Yr IRA. Is this a safe investment?
FICO crisis
The story continues. FICO FICO FICO... you only have a FICO Score if you loan lots of money, pay it off and loan some more. High FICO is not an indication of wealth.
Clark worries way too much about FICO scores
Life still goes on without a FICO score. That is why they invented credit unions.
401K
I am 60 yrs old and have around 60+ in my 401k. Should I move some of the money to a r-IRA, since the market is so bad.
