Personal Finance

Closing accounts (credit cards and banking)

  • Last Updated:
  • Aug 20th, 2016 6:39 pm
[OP]
Deal Addict
Jun 21, 2008
2958 posts
408 upvotes
Toronto

Closing accounts (credit cards and banking)

I have a PC financial chequing account that I barely use now and really only use it once or twice a year when I remember that i have money it loll

Should I just close this account off?

Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
7 replies
Deal Addict
User avatar
Dec 17, 2008
2764 posts
2193 upvotes
Winnipeg
Ticco wrote: I have a PC financial chequing account that I barely use now and really only use it once or twice a year when I remember that i have money it loll

Should I just close this account off?

Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
If your not applying for a Mortgage or a Line of Credit anytime soon don't worry about your average age of accounts since its only a small percentage of your credit score and your score will rebound in time.

As for the chequing account - if your not using it, go ahead and close it.
*Do you like someone's idea, post, or response? Why not consider giving them "thanks" and clicking the thumbs up to give them the credit they deserve.*
Deal Addict
Jan 2, 2015
1633 posts
638 upvotes
Toronto, ON
Ticco wrote: I have a PC financial chequing account that I barely use now and really only use it once or twice a year when I remember that i have money it loll

Should I just close this account off?
The account is free and gives you access to CIBC machines. Having said that, PCF does charge inactivity fees (every bank does), so if you're sure you won't use it you should close it.
Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?
Credit age is worth about 10% of your score. If your average credit age is young, you should keep it. Otherwise it's fine to close it. Note that doing so will also impact your credit availability (eg statement amounts remain the same but amount available decreases) so that will also decrease your credit. However, there's value in simplicity.
Deal Fanatic
Oct 7, 2007
9044 posts
4883 upvotes
Interesting question. Up until recently, I was thinking that keeping all of my accounts open even if I rarely use them was fine and not doing any harm. However, I recently received a notice about inactivity on my PC Financial chequing and savings accounts which I have not used in a very long time. PC Financial has not had any decent promotions in a really long time and so I have kept these accounts open with only pennies in each. However, upon receiving this notice I discovered that after some amount of time inactivity fees will kick in. Based on this, I am thinking of closing down the accounts I don't use and taking the chance that if a new promotion comes along I can just go to the trouble of opening a new account with them all over again. I don't want to have to start keeping track of when inactivity fees kick in on various account. That would be too much for me.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
4015 upvotes
BC
Ticco wrote:I have a PC financial chequing account that I barely use now and really only use it once or twice a year when I remember that i have money it loll

Should I just close this account off?

Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
choclover wrote: Interesting question. Up until recently, I was thinking that keeping all of my accounts open even if I rarely use them was fine and not doing any harm. However, I recently received a notice about inactivity on my PC Financial chequing and savings accounts which I have not used in a very long time. PC Financial has not had any decent promotions in a really long time and so I have kept these accounts open with only pennies in each. However, upon receiving this notice I discovered that after some amount of time inactivity fees will kick in. Based on this, I am thinking of closing down the accounts I don't use and taking the chance that if a new promotion comes along I can just go to the trouble of opening a new account with them all over again. I don't want to have to start keeping track of when inactivity fees kick in on various account. That would be too much for me.
Super-easy one-time 2-minute setup to avoid inactivity fees.

Setup a recurring every 3 or 6 months transfer from chequing to savings, and the same amount back the other direction. Even just 1c.

I have had literally 1c moving between all my PCF chequing, joint, and savings accounts for a few years now. No inactivity fees :)
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Deal Guru
User avatar
Aug 8, 2012
10198 posts
4015 upvotes
BC
Ticco wrote: Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
Is that your oldest card? Keeping it will help your average age of accounts and your credit utilization, especially if you ever decide to churn and get a bunch of new cards, the old cards keep your average age older.

If you close it at 10 years it will stay on your report and keep helping age for 10 more years until it falls off your report then.

So say you had 2 cards, 1 you get today and you close the 10-yr card.

Your average age is still 5 years.
In 9.99 years your average age will be 15 years.
Then in 10.01 years your old closed card drops off your file and you are back down to 10.

Then if you get 2 new cards for signup bonuses your average age drops to 3.33.

If you keep the old card open, you'd have a 20, a 10, and two 0's and the average would be 7.5 years.

If the card is free, keep it open and active once in a while to generate activity on the line on your report.

The report count months of good activity and a nothing month is just neutral in that respect of your score (but adds a month to the age so helps still for that part).
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
[OP]
Deal Addict
Jun 21, 2008
2958 posts
408 upvotes
Toronto
ace604 wrote:
Ticco wrote: Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
Is that your oldest card? Keeping it will help your average age of accounts and your credit utilization, especially if you ever decide to churn and get a bunch of new cards, the old cards keep your average age older.

If you close it at 10 years it will stay on your report and keep helping age for 10 more years until it falls off your report then.

So say you had 2 cards, 1 you get today and you close the 10-yr card.

Your average age is still 5 years.
In 9.99 years your average age will be 15 years.
Then in 10.01 years your old closed card drops off your file and you are back down to 10.

Then if you get 2 new cards for signup bonuses your average age drops to 3.33.

If you keep the old card open, you'd have a 20, a 10, and two 0's and the average would be 7.5 years.

If the card is free, keep it open and active once in a while to generate activity on the line on your report.

The report count months of good activity and a nothing month is just neutral in that respect of your score (but adds a month to the age so helps still for that part).
But how important is this age to your credit score? The bankers I go to when applying for credit lines keep telling me to close off my credit cards.

Well I forgot I had the government tax deposits linked to my PCF so it's actually never been inactive - I just let the tax returns accumulate and didn't even realize it. I was considering keeping this account open for promos that PCF seems to have every so often?

Yea the CIBC card is my oldest card it's over 10 years old for sure - obviously don't use it because the returns on it are so poor compared to my other ones.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
4015 upvotes
BC
Ticco wrote:
ace604 wrote:
Ticco wrote: Also for credit cards - I read on RFD that if you have a long history with a card, you should hold onto it even if you don't use it. Is this true?

I have a CIBC dividend card that I've had for over 10 years but it's been inactive for maybe 3 years now and I'm thinking of just closing it.
Is that your oldest card? Keeping it will help your average age of accounts and your credit utilization, especially if you ever decide to churn and get a bunch of new cards, the old cards keep your average age older.

If you close it at 10 years it will stay on your report and keep helping age for 10 more years until it falls off your report then.

So say you had 2 cards, 1 you get today and you close the 10-yr card.

Your average age is still 5 years.
In 9.99 years your average age will be 15 years.
Then in 10.01 years your old closed card drops off your file and you are back down to 10.

Then if you get 2 new cards for signup bonuses your average age drops to 3.33.

If you keep the old card open, you'd have a 20, a 10, and two 0's and the average would be 7.5 years.

If the card is free, keep it open and active once in a while to generate activity on the line on your report.

The report count months of good activity and a nothing month is just neutral in that respect of your score (but adds a month to the age so helps still for that part).
But how important is this age to your credit score? The bankers I go to when applying for credit lines keep telling me to close off my credit cards.

Well I forgot I had the government tax deposits linked to my PCF so it's actually never been inactive - I just let the tax returns accumulate and didn't even realize it. I was considering keeping this account open for promos that PCF seems to have every so often?

Yea the CIBC card is my oldest card it's over 10 years old for sure - obviously don't use it because the returns on it are so poor compared to my other ones.
Bankers? "Keep telling you"?

Are you applying for a lot of credit lines? Did you ever get rejected?

Closing an account only reduces your total credit limit, so if that's an issue for getting more you can lower limits, but unless someone specifically rejected you because you have too much available credit I wouldn't even do that.

My utilization is super tiny because my total limits on all my cards is more than my annual salary :)

I've read people here with total limits of double or even more.

Average age is 10-15-ish % of your score. Oldest account age is also a factor.

I would keep it open, and active, and full limit until someone specifically said "you have too much to get approved" at which point you can lower limits without closing accounts.

You can also do a product switch at CIBC. Wait for a promo or FYF on their better dividend card of you qualify and switch to that for a year, then switch back.

It keeps the same credit line on your report and isn't a new application.
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)