What to Do If Your Credit Card Account is Closed

What to Do If Your Credit Card Account is Closed
ARTICLE
David Andrew
By: David Andrew
Posted: August 26, 2013
Experts share their tips and advice daily on BadCredit.org, helping subprime consumers navigate the world of personal finance.

If your credit card account is shut down, it’s understandable if you’re frustrated and embarrassed.

However, it’s important to keep a clear head so you can address the problem as effectively as possible. There are a few things you can do to minimize the financial damage when a lender closes your credit card.

1. Figure out why your card was shut down.

Your very first move after your card is shut down should be to figure out why the credit card company made this decision. Call up the company’s customer service department and ask what happened.

If you’ve been missing payments, this could be the reason. Credit card companies also shut down accounts if they aren’t used often enough.

It’s also possible the credit card company made a mistake and might reopen your account once you point this out.

2. Don’t try to fight the decision.

When your card is shut down, it’s easy to lose your temper and start threatening to take legal action against the credit card company. This won’t be an effective move.

You are not guaranteed access to your credit cards. Issuers have the right to shut down your card at their discretion.

You can try asking them to reconsider, but if the company has already made up its mind, you’re better off moving on than trying to fight the decision.

“Losing an account is annoying,

but it isn’t the end of the world.”

It may be wise to contact a reputable credit repair company first before you contact difficult creditors.

3. Consider the impact on your credit score.

The way a closed credit card impacts your credit score depends on why the account was closed.

The issuer will note to the rating agencies why they made the decision to close your card. If your account was closed because of delinquent payments, this will hurt your score.

If your card was closed for another reason, like lack of activity, the closing itself shouldn’t impact your credit score. You’ll just have one fewer line of credit.

4. Calculate your new credit utilization rate.

Another way the closed credit card will affect your credit score is by changing your credit utilization rate. This is the ratio of what you owe on your credit cards versus your total credit limit.

When one of your accounts is shut down, your total credit limit will fall by the card’s limit. If you keep your balances low on your other cards, this won’t be a problem.

However, if you are carrying a balance on other cards, your credit utilization rate will go up, which is bad for your credit score.

In this case, you should try to pay down your other outstanding balances as quickly as possible to fix this problem.

Losing a credit card account is annoying, but it isn’t the end of the world. Follow this advice to address the issue today and try not to make the same mistakes. You don’t want run into this problem again.

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