by MMBB Member Relations Director Peter Fairchild
What’s in the Article
Credit card issuers may close accounts suddenly and without notice often to reduce their risk. Card issuers are not legally required to provide advance warning before closing an account and there are several reasons that can trigger closure. This article explores why issuers terminate accounts and what you can do about it.
Reasons a Card Issuer May Close an Account Without Notice:
Steps to take Immediately After Your Account is Closed
Confirm the closure by checking email, physical mail or online account notifications. Then call customer service to verify the reason for the closure and gather any other details they may provide. The most important question to ask is whether payment method or monthly payment amount will change.
Other questions to ask include:
How it Affects your Credit Score
When a credit card is closed, voluntarily or involuntarily, it can impact both your credit history and credit utilization rate, two important credit score factors.
Losing the available credit from a closed account increases your overall credit utilization ratio. In general, a lower utilization rate is
better because it shows responsible debt management. Once your credit utilization exceeds 30%, your credit score may decline.
Your credit history is also affected. Since the age of your accounts makes up approximately 15% of your credit score, losing a long-standing account can reduce the average age of your credit, potentially lowering your score over time.
Ways to Minimize Damage
If your account is closed due to late or missed payments, focus on paying other creditors on time, reducing balances and routinely check your credit report for errors.
If your account was closed due to inactivity or the changes in a bank’s product lineup you may consider opening a new line of credit or requesting a higher limit on existing cards to offset the lost available credit.
Having a credit card account closed without notice can be unsettling but understanding why it happens and how to respond can help minimize the impact. Ultimately, knowing what to expect empowers you to safeguard both your financial flexibility and your long term credit health.
Translations of any materials into languages other than English are intended solely as a convenience to the non-English-reading public. We have attempted to provide an accurate translation of the original material in English, but due to the nuances in translating to a foreign language, slight differences may exist.
Las traducciones de cualquier material a idiomas que no sean el inglés son para la conveniencia de aquellos que no leen inglés. Hemos intentado proporcionar una traducción precisa del material original en inglés, pero debido a las diferencias de la traducción a un idioma extranjero, pueden existir ligeras diferencias.
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