Can a creditor close a credit card on the card holder with no warning?
Many of us have found ourselves in a position over the past 5-7
years where one or more of our credit cards were surprisingly closed by the
creditors. It is usually a shock and never seems to come at a good time. We may
be paying for a dinner out with the family or charging some merchandise at a
local department store when we find the purchase is declined. After calling the
creditor we are told the card was closed without warning. Even those with
excellent credit and no need for the extra credit card feel slighted when they
find out they have been rejected for continuing use of a credit card. How could
this be that creditors are allowed to just close credit cards on us without
notifying us in advance? Isn’t this wrong and illegal? The answer is it may be
wrong to us but it is totally legal. Since the Credit Card Act of 2009 many
changes were made to protect the consumers interest but not regarding creditor’s
closing credit cards.
Creditors can close accounts for many reasons and some seem quite legitimate, like late payments occurring, going over the limit, and filing a bankruptcy. Creditors can also watch your credit reports and assess your spending, payment patterns, and management habits. If they feel you are carrying balances with other creditors that might make you a riskier bet they can shut you down without warning. If you don’t use your credit card accounts they can pull the plug as well. Inactivity of credit is a common reason creditors close accounts. If you open too many accounts in a short time you become a greater risk. Many new accounts put you in a position for potential default since your ability to manage all of that new credit at once may be in question.
A creditor can legally close an account for a delinquency, inactivity, or default without informing the consumer. When creditors close accounts due to a poor credit report history they have to notify the card holder 30 days after the closing. Although it may seem wrong to take this action with no warning in advance there are valid reasons. Although most consumers might not take a negative action when they know the account will be closed some consumers would rack up charges just to use as much of the limit as possible or once the full limit is used they may get even by defaulting on the payment
Creditors can close accounts for many reasons and some seem quite legitimate, like late payments occurring, going over the limit, and filing a bankruptcy. Creditors can also watch your credit reports and assess your spending, payment patterns, and management habits. If they feel you are carrying balances with other creditors that might make you a riskier bet they can shut you down without warning. If you don’t use your credit card accounts they can pull the plug as well. Inactivity of credit is a common reason creditors close accounts. If you open too many accounts in a short time you become a greater risk. Many new accounts put you in a position for potential default since your ability to manage all of that new credit at once may be in question.
A creditor can legally close an account for a delinquency, inactivity, or default without informing the consumer. When creditors close accounts due to a poor credit report history they have to notify the card holder 30 days after the closing. Although it may seem wrong to take this action with no warning in advance there are valid reasons. Although most consumers might not take a negative action when they know the account will be closed some consumers would rack up charges just to use as much of the limit as possible or once the full limit is used they may get even by defaulting on the payment
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