Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Bank have cancelled my credit card and I don't know why. Can anyone shed any light?

(22 Posts)
NotActuallyAMum Sun 20-Jul-14 18:30:20

The letter says that it's because I haven't used it for a while (which is true) but this doesn't make any sense because my DH had an unused one with the same bank for ages and that didn't get cancelled until he phoned them and asked them to

I'm not bothered as such because we're not likely to need it but it's a worry because I'm sure they don't do these things for nothing and I'm also worried it might affect my credit rating

I have never defaulted on anything, I'm well within my limit on my credit card that I do use

Any ideas?

RandallFloyd Sun 20-Jul-14 18:43:29

Every now and then they tend to do a type of audit and close dormant accounts, although normally you would get a letter first.

If you don't want or need it I wouldn't worry about it.

It will actually go in your favour credit score wise. Too much available credit is a bad thing. Closing accounts you don't use is a good way to boost it,

NotActuallyAMum Sun 20-Jul-14 18:55:02

Thank you, that's made me feel better!

To be fair, they have sent me a letter in advance saying that my limit has been reduced to �500 and the card will be cancelled in 2 months

If it's going to go in my favour with my credit score, even better. Thanks again smile

RandallFloyd Sun 20-Jul-14 18:58:36

No worries smile

I would imagine that if you wanted to keep it open you could just ring them and start using it but if you're happy for it to go then it's probably a good thing this prompted you anyway. Win - win really.

Namechangearoonie123 Sun 20-Jul-14 19:01:49

It's a bad thing for your credit score

I had 5 credit cards 8 years ago. Gradually got rid of them over the years as didn't use them. I used to have a great credit score and now it's terrible (no debt)

When I took out insurance they said they were suspicious of people with no credit cards as it usually meant they couldn't have them

Cindy34 Sun 20-Jul-14 19:08:26

I had one cancelled through no usage. Opened a new bank account recently and that was no problem, so not sure if it affects credit score or not.

If you have no credit cards at all then I could see that being bad for credit score, as there is nothing to score against. Think credit scores are done on past 6 years credit history (think that was the number of years the person from one of the credit agencies said on MoneyBox).

RandallFloyd Sun 20-Jul-14 19:10:45

The OP does have a credit card though, one she is actively and responsibly using. That is good for a credit file.

Too much 'credit exposure' is not a good thing as lenders have to calculate the risk of you maxing out all that credit.

RandallFloyd Sun 20-Jul-14 19:11:09

Yes, 6 years is right, Cindy.

NotActuallyAMum Sun 20-Jul-14 19:15:33

Interesting...

I do have other credit cards, one with a �12,000 limit that I haven't used for ages and another with a �7,200 limit that I owe about �5k on that I use occasionally

I guess I just have to believe them that it is because I haven't used it and try not to stress about it. I'm certainly not going to ask them to reverse the decision - I don't need them to

Thanks everyone for your help smile

NotActuallyAMum Sun 20-Jul-14 19:19:14

Those random squares were pound signs on my preview confused

RandallFloyd Sun 20-Jul-14 19:22:13

That may well have added to their reason for cancelling it in all honesty.
That's almost £20k of credit available to you. At probably anywhere between 15 and 25% apr.
It doesn't mean you aren't managing your accounts properly it's just the fact that it's there that's the risk.
Imagine if you maxed it all out tomorrow. What are the chances you could afford the repayments? That's what they have to prepare for.

If I were you I'd look at lowering the limit on the £12k one too.

NotActuallyAMum Sun 20-Jul-14 19:46:59

The one that has been cancelled had a �12k limit too so I actually had over �30k available...

I think I will lower the �12k one that I still have, the chances of us using it are very very low

Thanks all smile

RandallFloyd Sun 20-Jul-14 19:53:12

Blimey. You could have had a right good time grin

Fluffycloudland77 Sun 20-Jul-14 20:04:56

I got a mortgage with no credit cards, the ma said the more credit you had available to you the more suspicious the banks were.

Dh had a cc that he had to settle in full before we could get an AIP.

thatstoast Sun 20-Jul-14 20:25:05

The thing to remember is there's a lot of different factors that make up a 'credit score' and each lender will consider different factors to be more or less important. So people's personal experiences are mostly irrelevant.

As, in your personal circumstances, you never use the card and you have easy access to credit through another lender then it's not a 'bad' thing.

Some other things to think about is how important is your credit score at this point in time. Do you have plans to apply for more credit at this point in time? If not, no need to worry anyway. If you are, then it might be worth thinking about your total available credit (across all cards) compared to your income. If you have access to 20k but earn 100k, for example, then it's not a big deal.

LadyOnARooftop Sun 20-Jul-14 21:20:07

OP don't worry it's perfectly normal practice (I work for a credit card company).

Even though you don't use the card, it's costing them money to keep you on book - for annual statements, sending a new card when that one expires, and just for bankrolling the available credit. If you read your ts and cs carefully, it will say that if you don't use your card after x months, they may close it. If you use it at least once between now and the end of the 2 months, it will probably remain open. They will have just done an automated sweep of who hasn't used their card, and system generated a letter. Nothing personal smile

NotActuallyAMum Mon 21-Jul-14 07:55:41

RandallFloyd yes I could grin good job I'm not like that eh LOL

Sounds like it's for the best then so I'll leave it. Thank you LadyOnARooftop, good to hear from some who actually works for them

I only earn just over £20k so to have that much available was never good really

TalkinPeace Mon 21-Jul-14 12:51:05

THey also do not like cards where they do not make money ....

teacher54321 Mon 21-Jul-14 16:11:29

The same has happened recently with two credit cards that I have that I haven't used since paying off in full in 2010. They had limits of about £5k each and were completely empty. I've chosen not to worry about it!

Cindy34 Mon 21-Jul-14 17:27:57

How do they make money? If you have a card and don't have a balance on it or doing transactions, then it must cost them a bit to provide the service. If you use the card and pay it off each month, then they must make some money from the card transaction fees.
They probably like people who pay interest, though that I suppose also means that they risk someone defaulting on the loan, thus incurring cost to get money back and they may not get all the money back if someone files for bankruptsy.
So I wonder who the best customers are? Those who use the card a lot but pay it off, or those who rack up a big debt and pay lots of interest?

RandallFloyd Mon 21-Jul-14 18:21:44

Definitely the former, Cindy. The risk associated with the latter really doesn't warrant the interest income.

The best deals will always go to the full balance payer who use their card a lot. They are the real cash cows.

Cindy34 Mon 21-Jul-14 18:25:32

Sounds like I am a cashcow then, or maybe a mini-cashcow as my monthly spending is usually under 1000. Expect some people spend far more than I do.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now