You’ve just been informed that your credit card account is closed. But why? You’ve been a responsible cardholder and you’ve never had problems before. The good news is that you’re not alone in this situation. The bad news is that, well, you’re not alone in this situation. Credit card cancellation is on the rise, and there’s very little you can do if your card issuer decides to cut you off. Here are some helpful tips for anyone who finds themselves in this situation.
First, Don’t Panic
The closing of your account might have nothing to do with your behavior as a cardholder. Some people have been shocked to find that their accounts were closed even though they’d never missed a payment. Sometimes accounts are closed because the lender sees too many credit inquiries on the file. This is a sign of the times; credit card issuers are trying to minimize their risks, and anything they interpret as risky behavior can result in a decreased credit limit – or a closed account.
Talk It Out
It never hurts to call the credit card company and ask why your card was cancelled. You may have to speak to several people before you get a straight answer, but try to stay patient and polite. When you finally get the answer, calmly explain your situation and ask if there’s a way to get the account reinstated. If they won’t work with you at all, take your business elsewhere.
Practice Good Credit Etiquette
When your account was closed, you lost access to that line of credit. Now you’ve got less available credit, and your credit utilization ratio has grown. This looks bad to potential lenders. That’s why it’s more important than ever to be on your best credit behavior following an account closure. Pay down your other balances as much as possible, and be sure to make all of your payments on time. Don’t apply for other credit cards or loans right away.
Take a Spending Break
To minimize the impact on your credit score, try to keep your credit card spending to a minimum for the next month or two. When it becomes obvious that you’re not going to max out your remaining cards, your credit score will rebound.
Be Honest With Yourself
Having your account closed might be a signal that you’re in denial about your debt load. Take the time to sit down and honestly assess your financial situation. What is your debt to income ratio? How does your present situation compare to a year ago? If your debt load has been steadily rising, getting dumped by your credit card issuer may be a blessing in disguise.
