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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: damircudic/E+/Getty Images September 02, 2022 Poonkulali Thangavelu is a senior writer and columnist at CreditCards.com and Bankrate, addressing debt and credit card-related legal and regulatory issues. Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Bankrate logo The Bankrate promise
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If you carry multiple credit cards and tend to favor some of them more than others, it may be that you are just not using one of the cards. Depending on your spending pattern and the rewards the cards generate, it may be that you rarely turn to this card to fund your purchases. That sort of strategic spending is good for you, but it isn’t in the best interest of the card issuer, particularly if the card . The issuer is trying to generate business off your account and has allocated a part of its lending power to your account. If you don’t use this card, your account remains inactive and does not generate the fees the issuer would receive were you to use the card. You didn t accept new terms
It could be that the issuer changed the terms of the card and you did not accept them. For instance, you may have opted for a card based on its program, which you thought would more than offset the card’s annual fee. Well, the issuer can also change some terms after your first year. It could hike up the annual fee, for one. The Credit Card Accountability Responsibility and Disclosure ( lays out that a card issuer has to send you advance notice of such significant changes, which could also include a hike in or cash advance fees, among other things. It will have to give you notice 45 days in advance and allow you to opt-out if you don’t accept the changes. If you do choose to opt-out, the card issuer is free to close your account. There are other changes, such as raising your , for which the issuer has to give you the same advance notice, but doesn’t have to give you the right to opt-out. And when it comes to closing your account, the law doesn’t even require advance notification. You didn t comply with card terms
One reason for card account closure that might be more in your control is whether you adhere to the . For instance, you should be careful to make at least your minimum payment by the date your payment is due. If you repeatedly make , that could be a cause for concern. And if your payment doesn’t go through, say your check bounces, and this happens more than once, your issuer might want to review your account. If you stick to your end of the contract, you will remain in the card issuer’s good graces and not give it cause to close your account. Your circumstances changed
Another reason why an issuer might close your account is if your income declines, maybe due to a job loss. The card issuer might also discontinue a card, in which case all those who hold that particular card will be impacted. In this case, the issuer could decide to . Why it matters
There could be other credit fallouts from an account closure, which could impact your credit score. For one, the total amount of credit available to you would decline. Consequently, it would increase your if you are spending the same amounts but drawing on a smaller total credit line. If the account that was closed goes back many years, the closure would also impact the length of your credit history, which also plays a role in your credit score. However, if that account was in good standing at the time it was closed, it will continue to factor into your credit report for 10 years and positively impact your . That’s why you should make use of your card at least occasionally so that it remains active. If the issuer decides to close a card, and you want to hold on to it, you can and to see if you can salvage the situation. Here’s . If your account is closed, you have the right, bestowed by the Equal Credit Opportunity Act, to know why it was closed — except when the account was closed for being dormant or because you did not make the agreed payments. Keep in mind that you have to pay off any outstanding balances even though the card is closed. The bottom line
Card issuers might decide to close a card for various reasons, which could be beyond your control. If you want to hold on to a certain card, you should make at least minimal use of it and stick to its terms of use. SHARE: Poonkulali Thangavelu is a senior writer and columnist at CreditCards.com and Bankrate, addressing debt and credit card-related legal and regulatory issues. Cathleen's stories on design, travel and business have appeared in dozens of publications including the Washington Post, Town & Country, Wall Street Journal, Marie Claire, Fodor’s Travel, Departures and The Writer. Related Articles