How to deal with restricted credit card?
November 30, 2017 9:06 AM   Subscribe

I was notified earlier this month that one of my two credit card accounts (the one I rarely use) has been restricted. I suspect it’s related to my change of address in August and/or the Experian credit breach thing. My question is should I jump through their hoops to un-restrict my card, try to cancel the card (not sure they will even let me), or just let it sit there restricted forever?

Hoops: I contacted them and was told that I have to submit copies of my drivers license, social security card, and utility bill or other proof of address. Originally I made a fuss and was told I could just submit drivers license, now they say I have to submit all three documents after all. I feel really resistant to sending an actual copy of my social security card (I mean, I can provide my number… and anyone who has the number could easily fake up a scan of a card, so how is that any sort of proof anyway?). I'm using the same phone number I've used since 2012 and the same email that I've used since forever. Why can't they do some combination of contact by phone, mail, and email to verify me like every other account I use? I just don’t want to do it.

Cancel: The credit report simulation available through one of my other accounts shows that cancelling my oldest credit card would take my credit score from excellent to fair. How long does that take to rebound?

Let it stay restricted: Like I said, I don’t really use this card currently. Is there any downside to ignoring this situation?
posted by Kriesa to Work & Money (6 answers total)
They may eventually cancel it for lack of use, and I'd bet they're more likely to do so if you don't act on the notice it's been restricted. I would jump through the hoops to keep it open.
posted by fedward at 9:36 AM on November 30, 2017 [1 favorite]

I would jump through the hoops. I would also follow up and pull a credit report and see what's going on since you're not sure why they've restricted your account.
posted by clone boulevard at 10:59 AM on November 30, 2017 [2 favorites]

I would cancel, and instead apply for a credit card that's worth using more than rarely. This advice is coming from somebody who is a relatively low-effort but still active player in the credit-card-for-points game, but even if you replaced it with something simple and easy and no-fee, like the Chase Freedom Unlimited or the Citi Double Cash Card or, if you have access to USAA, their 2.5% cash back card (no link because I don't live in one of the states where this is currently offered), you'd get some return on your spending and maybe a couple hundred bucks signup bonus, and not have to deal with a company that treats you like a suspect rather than a customer.

I say to replace it rather than simply cancel because the hit to your credit score (if the simulation is accurate) almost certainly isn't due to the fact that you're closing an account in itself - this may result in a few points drop, but nothing drastic. Instead, it's because one of the major factors that goes into credit scores is the percentage of available credit that you're using at any one time. If both your cards have limits of $5,000, say, and you have an average balance of $2,500, then you're using 25% of your available credit (30% is a sort of fuzzy line that credit score companies draw at which point credit utilization becomes a problem). But if you cancel one of the cards, suddenly you're using 50% of your available credit and that looks awfully risky to lenders. And that's not a factor that bounces back, unless your credit limit on the one card increases or you decrease your average monthly balance.

At the same time, if you aren't expecting to buy a car or a house anytime soon, your credit score is kind of meaningless, right? No need to be beholden to a number that makes no difference in your irl life. I still think it's nice to have a card that gives some benefits/points/cash back, but maybe your primary card already does that. If so, and if you aren't looking to take out a loan, maybe you'd be just as well off to cancel and forget the old card.
posted by exutima at 11:29 AM on November 30, 2017

Cancelling will reduce your credit score, because your number of accounts will decrease.

Getting a new card will reduce your score for a while, because your average age of accounts will decrease and there will be one or more hard credit enquiries.
posted by monotreme at 5:22 PM on November 30, 2017

If the card doesn't have an annual charge, I wouldn't cancel it. Average age of account factors fairly heavily into credit score, and it's not really a metric you can game. Jump through the hoops and just leave the card in your sock drawer if you don't want to use it, but keep the account in good standing.
posted by reptile at 5:22 AM on December 1, 2017

Definitely jump through the hoops. We decided I would be the one to open a new account just in my name since my husband is planning to finance a car soon. And with all other things shared, that drop in average age has hit my credit pretty hard compared to my husband's.
posted by thejanna at 6:46 AM on December 1, 2017

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