Nonpayment is not the only reason that your credit card company will use to close your account. Other reasons include suspected fraudulent activity, non-use, decreased credit score, increased debt and another card company increasing your limit. While the Credit Card Accountability, Responsibility and Disclosure Act of 2009 grants protection to cardholders regarding interest rate increases and double-cycle billing, it does not prevent the company from closing accounts at any time for any reason. Consumers may not be able to prevent all card cancellations, but there are steps you can take to limit your chances of your card being canceled.
Maintain your credit score. Issuers may cancel your existing account if your credit score goes down. Wells Fargo tells consumers seeking to maintain their score to keep the balances on all cards less than 20 percent of your yearly after-tax income, make at least your minimum monthly payment on time and to contact your creditor if you have financial difficulties.
Order your credit report. Consumers have the right to one free credit report from TransUnion, Experian and Equifax -- the three major credit reporting bureaus -- each year by visiting AnnualCreditReport.com. Errors on your report can cause a credit card company to cancel your account. If you find errors or indications of fraud such as accounts that are not yours or inaccurate balances, contact the reporting bureau and ask it to remove the erroneous information. You will have to submit proof with your dispute for the bureau to investigate your claim.
Make purchases with the card. Bankrate.com recommends using your card at least once every six months to prevent closure for nonuse. While the purchase does not have to be large and you do not have to maintain a balance, using the card occasionally helps the credit card company know that you want to keep the account open.
- If the company cancels your account, The Consumerist website recommends calling the company and asking it to reopen the account. If the company refuses, requesting a new account with the same credit limit as the old one can lessen any negative effect on your credit score.
- Since having a credit card account is completely at the discretion of the company, there is no way to completely ensure that it will not cancel your account. Horror stories abound of consumers far from home that find that the company canceled the account. There is no recourse for consumers other than having other ways, such as cash or traveler's checks, available to make a purchase.
- NPR: Some Consumers See Credit Cards Canceled
- NYC Department of Consumer Affairs: Consumer Alers - New Protections for Credit Card Users
- Wells Fargo: How to Maintain Good Credit
- Federal Trade Commission: How to Dispute Credit Report Errors
- Bankrate.com: Improve Credit Score by Using Credit Cards
- The Consumerist: HSBC Canceled My Card Due to Inactivity and Ruined My FICO Score!
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