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Use Your Credit Cards to Avoid Cancellation

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 [1] is used, and there is no cash rewards program [2]. Those cards just fall to the bottom of my priority list.

Current Credit Cards

After the closures, and opening up some other great [3] new [4] cards [5] last year, we have 93 open credit lines right now; up 4 from the 89 accounts [6] 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 [7], 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 [8].)
  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 [9], 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 [10].
  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 [11].

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