How to Prevent Your Card From Being Canceled by Your Credit Card Issuer
If you have had credit card debt in the past, or have an old card that you no longer use, you probably read the advice that you should not actually cancel your card , but rather leave it open to increase your credit rating ( you can learn more about how this works here ). In theory, this is a good plan. But if you are not actively using your card, your issuer may simply cancel it for you.
There are many reasons why your credit card issuer (credit card company, bank, or other institution through which you applied) might cancel your card. In fact, they don’t even need a reason not to renew your line of credit.
But some reasons are more common than others. One such example is frequent non-use of the card. Your issuer makes money every time you make a transaction, and naturally they hope that you accumulate debt and pay interest. When you are not using your card, you are of no value to the bank or the issuing company.
If you’re trying to pay off debt or consolidate cards and don’t want to use your old cards, you can set one or two bills to auto-pay to keep transactions going every month.
The issuer can also cancel your card if your credit rating drops or if you have incurred a large amount of debt. “We look at a variety of elements, including their expense and payment history with American Express, their debt / expense / payment history with other lenders, credit bureau scores, and other information on credit reports,” said Sonia O. Conway, vice president of public relations. and ties to American Express, CreditCards.com reported.
And of course, if you do not comply with the terms of the card agreement – you pay late, exceed your limit, etc. – they can void your card. Hole cards hurt your credit score .
Nor does your issuer have to notify you that it is canceling your card. “Under the Equal Credit Opportunity Law, lenders can close an account for late, inaction or default without notice,” CreditCards.com said. “If they close an account for other reasons, such as an unfavorable credit report, they must notify the cardholder within 30 days of the adverse action.” This is not entirely beneficial to the consumer.
In addition to making occasional purchases with cards to keep them open, there are a few more ideas from CreditCards.com:
- Pay (at least) the minimum payment every month on the due date.
- Monitor your credit score so you don’t miss out on inaccurate information.
- Search online forums for cards that interest you to see if users are complaining about frequent cancellations.
In addition, credit card issuers can also change your interest rate or credit limit , depending on the circumstances. But if you make timely payments without accumulating debt, you are more likely to be in danger.