Chase Shutting Down Accounts After Periodic Reviews?
There is a report on Reddit from user morphogencc reporting that Chase recently shut down all of their accounts. Morphogencc says that they went to use their card recently and it was denied. Once they called Chase they were informed that they were shut down because their overall credit, with all banks, was too high and Chase deemed their accounts risky.
Morphogencc estimates their overall credit limit, with all banks, is about 2X stated income. They also said that they have not recently applied for any accounts with Chase. Chase said they came to this decision after doing a “periodic review”.
What Does This Mean?
This is only one data point so no reason to jump off the deep end as of yet. But, this is an overall theme coming from most of the banks these days. They are tightening the screws and overall credit is a logical thing for them to look at next.
In the past banks have been focused on how much credit you have with their individual bank. Chase could be looking at other ways to mitigate risk. Someone who has large amounts of credit available to them could be considered a risk if another recession hits.
Another thing worth pointing out is that Morphogencc reports having 6 personal and 1 business card with Chase. Did having so many personal cards with Chase lead to this somewhat? Morphogencc has filed an appeal which many people have been successful with lately.
What Should We Do?
I have been talking about closing down accounts a lot recently for a few different reasons. By closing cards that are no longer useful your life gets a little easier, it should lead to more approvals, and it looks like now it could potentially help avoid a shut down.
The other option would be to lower your limits on all of your cards. This will help some with average age of accounts since you wouldn’t have to close any going this route.
I still plan on closing down some cards and I will try to keep one no annual fee card with each bank. This will keep me as an active customer at no cost to myself. You are more likely to get approved as a current customer and sometimes it will stop a hard pull from happening. With some banks, like US Bank, it is mandatory to get certain cards.
This data point in and of itself does not mean we need to panic but it is a word of caution. I think some proper planning is important these days. Free and easy flowing miles and points are a thing of the past and we need to be smarter about how we handle our accounts.
What do you think of this development? Do you think it is a legit threat or just a one off.