Do you have idle credit cards laying around?
My Story
My son-in-law was telling me how his stellar credit score took an amazing nose-dive.
The reason for the plummeting credit score was due to a never used, zero-balance credit card.
Unfortunately, on the anniversary of the card, the annual fee was charged.
Since he didn’t use the card, he assumed there was no balance.
For six months the annual fee collected late fees and the unpaid credit card plundered his credit score. All without his knowledge.
He is the second person that I know to whom this has happened.
If you have idle credit cards, take steps to safeguard the cards.
Make sure you know all the credit cards that are currently in your name.
It’s surprising how many credit cards accumulate over time.
Make a master list.
Check all three credit bureaus to make sure you don’t miss any accounts.
Note: You are entitled to one free report per year from each agency. While I rely a lot on Credit Karma, not every company reports to them.
If you open a new credit card, update the list.
Idle credit cards are accounts ripe for fraud.
Set up text and email alerts for every credit card.
Alerts allow you to take steps sooner rather than later, before a situation has morphed into a catastrophe.
Set up automatic minimum payments for all credit card accounts.
Automatic minimum payments are a safety net against late fees and credit dings in the event an alert is overlooked, or a payment is missed.
If you have a lot of idle credit cards, consider closing some of the accounts.
Consider is the key here. There are pros and cons to closing accounts you no longer use.
The pros to closing an idle credit card account are obvious.
There are no unused credit cards lurking out there that need to be tracked and managed.
If available credit is a temptation, closing a credit card eliminates the possibility of using it.
The con to closing an idle credit card is that it could cause a dip to your credit score.
The dip should be short term and minimal. However, it depends on the overall remaining utilization of credit.
Note: overall utilization of credit is a fancy way of saying the percentage of available credit being used. If you have a credit card with a limit of $1,000.00 and you have a balance of $300.00, the credit utilization is thirty percent.
Close newer accounts first and don’t close multiple accounts all at once.
A slight temporary dip in your credit score is worth it if it eliminates managing a lot of idle credit cards.
Do you want to ensure an idle account remains open?
After a certain period of time, most credit card companies close unused accounts.
A good way to ensure that a credit card account remains open and active is to set up a small, recurring payment that gets automatically charged to the card.
Just make sure to set up automatic minimum payments.
Do you have idle credit cards laying around?
Avoid future headaches and heartaches by taking steps to safeguard and manage all your credit cards.
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