Consumer Reports: Credit Card Cancellation
WEST PALM BEACH, Fla. (CBS12) —
Not using a credit card may actually damage one’s credit score.
Jen Murphy is expecting her third child this April. In anticipation she spent several months paying off her Wells Fargo Visa Credit card.
Then it was cancelled.
“Our intentions were to save it, and keep it like an emergency card,” said Murphy, “and also to help with some of the costs when the baby comes.”
Wells Fargo said that six months of card inactivity was a leading factor in their decision to cancel her card. Along with balances on Murphy’s other loans.
Banks cancelling inactive cards is common. And that can hurt one’s credit score.
“When you close an account, you lose the available credit for that account. You also have less available credit in total.” Said Rod Griffin, Director of Public Education for Experian.
Murphy’s credit score did see a small drop after she received the letter. Inactive accounts cost banks money to maintain. So if you want to keep a card, use it.
“So make a small purchase. 10, 20, 30 dollars,” said Griffin. “turn around and pay it in full each month.”
Wells Fargo says one purchase a year should be enough to keep an account open. Customers are generally given advanced warning of a cancellation.