Use Your Credit Cards to Avoid Cancellation

Posted by Madison on January 27, 2009

With credit card companies cracking down on unused accounts, it’s a good time to review our credit card accounts. We’ve gotten a few letters lately of closed accounts, from Chase and Citibank, for unused cards.

Usually, I’m pretty diligent about using each card once per year, but I guess I got a little lazy! Sometimes it’s hard when the card has a low limit, the 0% balance transfer offer is used, and there is no cash rewards program. Those cards just fall to the bottom of my priority list.

Current Credit Cards

After the closures, and opening up some other great new cards last year, we have 93 open credit lines right now; up 4 from the 89 accounts we had a year ago.

I’m pretty diligent about using our oldest cards (those 10-15 years old) to make sure those never get canceled.

The four that were canceled had relatively low credit limits as the result of reallocating credit limits, and were opened in the last 3-5 years; I don’t expect much of an impact on our credit score from the closures.

However, if the trend continues, a lot of closed accounts could impact our credit… I’ll be working hard in the next couple weeks to make charges on our inactive cards.

Keeping Credit Cards Active

I pulled out my old spreadsheet to plan my attack. When I’m trying to make sure to use our cards once per year, here’s how I manage it:

  1. Make a list of all your cards (easy to do if you have a list in MS Money.)
  2. Find all the cards you haven’t used in the last 11 months.
  3. Rank the list of unused cards. I give a higher ranking to the oldest cards and those with high credit limits.
  4. If you are into credit card arbitrage, double check that you aren’t using a 0% balance transfer on those cards, just to make absolutely sure you wouldn’t accidentally hurt one of the balance transfers with a purchase.
  5. Pull all the cards, and put a sticky note on each one with the rank, rubber band them and put them in your purse or wallet.
  6. Next time you need to make a small purchase, use the one with the highest rank.
  7. After using it, put the card back in storage. I only regularly carry my preferred cash back credit cards.
  8. Put a note on your bill pay list that you’ll have to pay that bill.
  9. Monitor your credit report and score with Free FICO Scores & Credit Reports.

Of course, it’s not really that scientific if you only have a few cards. But if you have a lot like I do, you want to be able to get through them quickly, without sacrificing much of your cash back opportunities. In addition, if it’s not realistic to get through them all, at least you are using the most important cards, those that affect your credit score the most, first.

What’s your strategy to remind yourself to use old credit cards once per year?

More Canceled Credit Cards

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Comments to Use Your Credit Cards to Avoid Cancellation

  1. Why do you have 93 credit cards? I’m not asking to be catty. I would really like to understand. I think this must have been discussed before I started reading your posts.
    Thank you.


  2. Wow, are you crazy? Why would you want that many credit cards? I don’t even have one. Did you just sign up every time they sent one to you in the mail? Are you trying to reach some kind of record? I saw that you now have a million dollars in credit line. Are you planning on a big purchase one day soon?

    I’m kidding around also, but seriously why?

    Travis @ CMM

  3. 93 credit accounts? Is it April 1 already?

    Seriously, have you considered how much your behavior is being manipulated by the companies that issue these cards and by the credit industry in general? Exactly who is the customer here?

    No offense, but some of us have plenty of other activities that we enjoy so we prefer not spending time worrying about keeping credit card accounts active.

    Mr. ToughMoneyLove

  4. Wo!!! I’m with Nancy, can you explain or provide the link that explains why you have so many credit cards? I’m about to read the post again just to make sure that I read it correctly the first time.

    Ms. MoneyChat

  5. Good question everyone! I realize it’s not normal to have that many cards, nor is it responsible if you were to just run up credit card debt.

    The vast majority of the cards are due to credit card arbitrage.

    Essentially, using the 0% balance transfer offers and putting the money in a savings account to earn interest.

    I’ve been running credit card arbitrage over 5 years. Balance transfer offers expired yearly in the past, so we would each get about 5-10 new cards per year to roll over to new cards.

    You can see where we’ve racked up the cards over time.

    I keep them open, because it helps to reallocate credit lines for the next offer; and keeps our credit score healthy (for utilization purposes).

    In the past we’ve made about $12,000 over the course of a year, so even a little bit of time spent to manage the cards has an incredible payoff.

    Not something that I recommend though!


  6. And here are some past articles with more information:

    Our Credit Limits: Over $1,000,000!

    Our Credit Card Balances: $223,270


  7. The credit card issuers are closong down inactive account to prevent the defaulter risks.

    Perhaps they are thinking if you do not use the account for more than 12 months and suddenly activating it, this may means you’re in some sort of finanial difficulty and utilizing the credit for help.

    The credit card issuers are actively lowering credit limit to minimize their financial loss due to irrecoverable loss.

    All these will somehow affecting your credit socre and rating. So do monitor them cloasely if you are affected.

    Credit Card Online

  8. Hi Madison. Wondering how you teach your children not to rely on credit when they see you with so many cards (at the shop trying to decide which card to use, etc.)


  9. It’s pretty easy to do with Capital One because they send out those purchase checks all the time. It’s essentially a mini-BT and they usually send 2-3 at a time. I used to get irritated by them, and now I look forward to them 🙂

    Matt O

  10. @ Lynley: Fantastic question! My credit card purchases are actually pretty limited. Usually just gas, groceries, and Costco. All of our eating out, haircuts, and other purchases are all handled by cash. So the majority of the time, the kids see me using cash.

    When I do use credit cards, we talk about how the card is connected to our bank. (Not quite correct, however, my oldest is only 3… we’ll get into more details as he gets a little older).

    I’m very conscious of the kids, and I make it a priority to discuss what we’re doing with money when they see me doing various things.


  11. P.S. And I typically only carry 2-3 cards in my purse at any given time!


  12. Wow, that’s a lot of cards and interesting method with the savings accounts 🙂 I think the card companies are cracking down on this now. In the UK they call people who move from one balance transfer offer to another a ‘card tart’. Tart being slang for someone who gets around a bit!


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