Can credit card companies close your accounts without warning? How does it affect your credit score?
Sara asked:
I received a letter in the mail from Juniper (iTunes Rewards) stating that they have closed my credit card account due to inactivity. I opened the account about 18 months ago and have never actually used it. Can they close my account just like that without any warning? How should I handle the situation? (Is there anything I can even do?)
Also, I know that closing credit card accounts lowers your credit score. Does anyone know how much mine will be affected?
An account open you need to use it once or twice year minimum.
Each account is a potential borrower that they have to worry about funding. If you don’t use your account, they will close it and give your slot to someone else.
Yes, they can close your account. In fact, I’m surprised it stayed open 18 months if you never used it.
Closing the account will only afffect your score if you are carrying balances on other credit cards. About a third of your score is based on the ratio of credit card debt to limit. When you close an account, you lower the limit. Thus making the debt percentage larger. Carrying balances of more than 30% will hurt your score.