A reader named Brad recently wrote in to share his experiences with card issuers closing dormant accounts. Here’s what he had to say:
My wife and I have transferred balances from one 0% offer to another for years. We have 13 bank credit cards open and over $200,000 in open credit lines. We have been successful in moving debt around so well that we have paid very few interest or transfer charges over the years.
I’m writing to tell you that last week, I received two notices that accounts were being closed, one for not being tapped in the past 12 months and the other for the past 24 months. That is OK with us, but I wouldn’t want it to continue. Both were Chase and both were accounts previously owned by Providian and WaMu.
It looks like Chase is clamping down on open credit lines that aren’t being utilized.
This is an interesting pattern, and is somewhat in line with the increasingly common practice of reducing credit limits. In this case, they’re decreasing the limits on unused accounts all the way to zero.
While this move probably isn’t a huge deal in most cases, it’s important to keep in mind that lower credit limits will increase your apparent credit utilitization, which can negatively impact your credit score. Given how skittish creditors have gotten, it’s conceivable that this sort of thing could have a ripple effect as other card issuers might react negatively if/when they see your credit score drop.
Edit to add: A reader named Patrick just pinged me to let me know that Discover is likewise closing dormant accounts.