What to Do When Your Credit Card Company Tells You to Get Lost

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.

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How Much Is Your Credit Card Really Costing You?

Most people do not give much thought to how much the use of credit cards really costs. While you may think you are aware of the costs of credit, there are many hidden fees and charges that often go unnoticed by consumers until it is too late. If you do not keep a very close watch on your credit card fees, you could end up paying hundreds of dollars per years without evern realizing it. If you are trying to stay within a budget, hidden credit card fees can be a real drain on your finances.

Here are some of the most common types of credit card fees and what you can do to avoid them:

Your grace period may seem to be a period of time in which you can pay your bill past the due date without accruing additional interest of fees. While this may have been true in the past, credit card companies are making it more difficult to pay your bill late without any extra charges. In previos years, if you charged the maximum on your credit card but were able to pay your balance in full before the end of the grace period, it was like a loan extension that cost you no additional money. The majority of credit card comanies have reduced the grace period to less than 25 days and some have eliminated grace periods all together. A purcahse you make at noon today will usually begin accruing interest immediately. Check the fine print on your contract with the credit card company. If you find that you have no grace period before interest starts to build, consider switching to a more user-friendly card.

Late fees can really add up. Make certain you know what the late fees are for your credit card and under what circumstances you can be charged. Late fees have increased dramatically over the past several years. This fact combined with a reduction in your grace period means a hefty profit for credit card companies. Whenever possible, send your payment the very day you recieve your credit card statement. There are several reasons to never make a late payment on your credit cards. The most obvious reason is that you will avoid any late fees. Next, a late payment can be reported to the major credit bureaus, leaving a bad mark on your credit report. There is also the possibility that by making one late payment, your interest rate can be raised permanently.

You may not be aware that even with a single late payment, your credit card company can, and most likely will, increase your interest rate. One late payment gives your credit card company the right to raise your interest rate to the maximum allowed by law. This does not just apply to your credit cards. Any late payments reported on your credit report can give all your lenders the right to raise your interest rates. A late payment means higher risk to a lender and you may find that several of your interest rates go up due to a pate payment listed on your credit report.

Keeping your interest rates low and avoiding hidden charges and fees is the best way to save money over the long-term when it comes to your credit cards. Managing your credit is one of the most important factors in your overall finaincial stability. Make sure you understand completely the terms and conditions of your credit cards and all other credit accounts you may have such as your car loan, mortgage, and any other revolving accounts. By making your payments on time, you will save hundreds or more dollars each year in interst and other fees. Read More...