Credit Card Fraud
Credit Card fraud hit a little too close to home yesterday. I received a call in regards to a card that I kept in a safe deposit box. It had not been used for several years and cancelling it was on my list of things to do. Someone used it to check into a motel in California. The card is now canceled.
With the rise in unemployment, it becomes more difficult to obtain credit. Some may choose to hang on to old cards "just in case" they lose their job and are unable to obtain a new card to use as a safety net. There are a couple of reasons why this may be a bad idea.
Unused credit accounts can damage your credit rating because of the potential amount of credit you have access to. It is also worth noting that some card companies charge fees for dormant accounts.
As in my case, unused cards could put you at risk for fraud. There tends to be an increase in fraud cases in times of recession. This type of fraud could go undetected if you are not checking your statements regularly...especially if you move and forget to notify the company of your new address.
If you are unsure if you have unused accounts, check your credit report. It will also help you spot unfamiliar credit applications and unexplained balances that would indicate that you are a victim of fraud.
Consider closing down unused accounts, especially if you are applying for a loan. If later you decide you need a credit card, you may find a better deal on the market that is available only to new card holders.
Remember that cutting up a credit card is not the same as canceling it. Cutting it up will stop you from using it but you still need to contact the company and them to cancel it. Ask for a confirmation letter as well. Sometimes the account will be left open for a while in case any payments you've made haven't come through yet. Double check a month or two later.
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