by Christy Bieber | Aug. 1, 2019
Your credit card company can close your account without your permission. Here are some reasons why they might.
When you’ve gone to the trouble to find the right credit card, it's frustrating if your card issuer closes your account. Not only that, but closing card accounts can hurt your credit score and deprive you of a credit line that you need.
Unfortunately, credit card issuers have broad discretion to close your account. While this doesn’t happen often, certain behaviors make involuntary account closure more likely.
Why would a credit card company close an account? Reasons include:
If you don’t use your card often, your card issuer may dramatically reduce your credit limit or close your account altogether. Different card issuers have different policies on when to close a card for inactivity. They don’t have to tell you beforehand, so use your card every couple of months to make sure this doesn’t happen.
Many card companies track your spending and look for patterns that suggest you could be in trouble. If you max out your credit cards and don't pay the balance down, your credit issuer may get nervous and decide they don’t want to keep you as a customer. If this happens, they can close your account. Of course, you still have to pay any outstanding balance even if you can’t make new charges.
When you get a credit card, you agree to a whole host of terms and conditions. If you don’t follow those terms, your card issuer may close your account. This could mean, for example, that your account gets closed for going over your credit limit, being late on payments, or otherwise violating any rules set by the card issuer.
If your credit score declines a lot, you may no longer meet the qualifications to remain a cardholder. Credit card issuers may be concerned about the reason for the drop in your score and decide they’d rather close the account than take a chance on letting you make charges you can't pay back.
Default is costly for card issuers. Credit card companies want to avoid this if at all possible -- and they know the signs that someone may become unable to pay back what they owe. If you default on credit cards with other card companies, for example, your current card issuer may decide you’re now a high-risk borrower who they no longer want as a customer.
Card companies used to raise your interest rate dramatically if you missed any payments, even with other card issuers. This was called a universal default penalty. Consumer protection laws have disallowed this practice. Card issuers can’t jack up your interest rate once they become concerned about your ability to pay. But they may decide to close your account instead.
Many cards allow you to add authorized users, which means you give permission for someone else to use your account. Some cards have limits on the number of authorized users you can add or they may charge a fee per user. Others are more flexible.
However, your card issuer can become concerned about the number of authorized users you’re adding. Or if you keep adding and removing authorized users. That raises red flags, and you could have your account shut down.
Sometimes you’ll lose access to a credit card through no fault of your own. It's simply because the card will no longer exist in the future. Often, if your card is discontinued, the card issuer will offer you the chance to switch to a similar card. Before you decide to do this, see if you’ll retain your credit history and find out if the new card has similar rates and terms. Don't switch to the new card unless it makes sense for you.
Many people like to game the system when it comes to credit cards. They manipulate rewards programs and bonuses to try to score tons of credit card rewards. Card issuers often don’t like these types of cardmembers since they cost the issuer money. If you become an unprofitable customer, your card company may give you the boot and let you know they no longer want your business.
Card issuers often won't give you a warning before they close your credit account. Still, you can contact your credit card issuer to ask for an explanation. You can also try to appeal the account closure and get it re-opened. However, since card issuers have broad discretion to close accounts, there’s little you can do if your card company decides they don’t want you as a customer anymore.
Your best bet is to try to avoid behaviors that could lead to involuntary account closure. Use your cards regularly, avoid maxing them out, don't do anything that hurts your credit score, and follow your cardmember agreement carefully. If you do these things, you shouldn't have to worry about figuring out why your card issuer closed an account you wanted to keep.
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