Your credit card company just informed you that your account has been closed. Worse, perhaps you discovered the closure after your card was declined. That’s ultra inconvenient, but don’t panic: You may be able to get your account reinstated.
What to do if your credit card company closed your account for no reason
If your account was closed without explanation, take these 2 steps:
Call your credit card company. This is the first thing you should do after learning about your account closure. Call your provider’s customer service line, and a representative may be able to shed light on your account status. The phone number should be on the back of your card and on your credit card statements.
Ask if you can have your account reinstated, and commit to fixing any issues. It never hurts to ask. If the reason for your account closure is relatively tame — inactivity, for example — your account may be reopened with a simple request. If the reason is more serious — such as defaulting on your debt — the odds of your account being reopened are much lower. Still, you may have a chance if you negotiate with your card provider and commit to fixing the issues that caused your account shutdown.
Beyond making an appeal to your card company, there’s not much else you can do to get your card account reopened. But if your account is permanently closed, it could give you an opportunity to get another credit card you like even better.
Why did my credit card company close my account?
Here are a few reasons your card company may have closed your account. If the company doesn’t let you reopen your account, consider a card from a different provider.
You defaulted on your payments. If you don’t pay your card bill for 60 to 90 days, your card provider may close your account. It gets worse if you don’t pay your card bill for several months. Typically at the 6-month mark, your provider will charge off your debt. This essentially means your provider designates your card debt as unlikely to be repaid. It will report the charge-off to the credit bureaus, and your credit score will take a hit. This unfavorable mark will stay on your credit report for 7 years.
Your card is inactive. Credit card issuers make money when cardholders carry balances month to month. If you’ve stopped using your card for a significant period of time, your provider might see you as someone it can’t profit from anymore. Accordingly, it may close your account.
There’s been a change in your credit report. In this regard, one of the most common reasons for account closures is a significant drop in your credit score. This may stem from a string of late payments on your credit accounts. Consider requesting a copy of your credit report to see if there are any red flags. Also, ask your card provider for information about your account to clue you in on what you need to fix.
You didn’t agree to changes to your card terms. With at least a 30-day notice, your card issuer can increase your interest rates or make another significant change to your account. If you don’t agree to a change, your provider might close your account. You’ll be allowed to pay off your balance according to your current card terms.
Your provider is going through changes. You may actually have done nothing wrong — your provider may simply be making a major change. For example, it might be discontinuing support for the card and closing the product to new applications. Or it might be going out of business.In these scenarios, the credit card company will notify you about the change, and it may give you recommendations on how to move forward.
What if my card company won’t reopen my account?
Your card company has the right to close your account for any reason. If the company won’t budge on its decision, it’s easier to simply consider another card provider.
Here are a few things to do after your card account is closed:
Re-calculate your credit utilization rate. If your credit card is closed, your total credit will go down. This, in turn, will increase your credit utilization rate — which typically has a negative effect on your credit score. Re-calculate your credit utilization rate and check if it’s under the recommended level of 30%. If it’s not, consider paying off some debt, whether it’s from the closed card or other credit cards. This will help you protect your credit score, which will factor heavily when you apply for a new card.
Take stock of your financial situation. If you had debt on your closed card, you’re still responsible for it. Pay it off as soon as you can. Consider checking your credit score and credit report. Also, consider whether you need — or even want — another credit card.
Apply for a new credit card. It’s time to look for a new credit card if you’ve determined your finances support having one. Think about what you didn’t like about your old card, if there were any downsides. Or if you really enjoyed your old card, look for a similar product.
Keep up with payments. Making payments on time is a tried-and-true way to stay on good terms with your card provider.
Use your card. To prevent card closures in the future due to inactivity, use your card at least once every 3 months. You don’t have to carry a balance — just have some spending activity once in a while. Setting up pre-authorized bill payments on your card is a a great way to maintain an active status.
Protect your credit score. Significant drops in credit scores are sometimes the reason for account closures. To avoid giving your provider cause for concern, understand the factors that go into your credit score — such as your debt-to-income ratio, repayment history, and missed or late payments — and maintain it.
Getting your card account closed is an unpleasant surprise and a big hassle. Your best bet is to call your provider, inquire about the closure and see if you can get your account reinstated. If your card is closed for good, consider applying for a new credit card.
Frequently asked questions
You’ll find the customer service number on the back of your card or on your credit card statements.
Because a charge-off is the result of several missed payments, your credit score will already have been damaged. The charge-off itself is a red flag on your credit report, and it may severely affect your ability to qualify for new credit — cards included.
It’s rarely advisable to carry a balance month to month, as this will attract interest. Your provider is unlikely to close your account if you pay your balances in full. However, there are never any guarantees, and your account status is always up to the card company.
Kevin Chen is a personal finance expert and a former writer at Finder. His expertise has been featured in CNN, U.S. News and World Report, Lifehacker and CreditCards.com, among other top media.
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