Are credit card companies allowed to cancel credit cards that have not been used in a long time? Many people have credit cards in their wallet that they never use. Others have credit card accounts in their name that they don’t even have a credit card for, having incorrectly “canceled” them or never received them in the first place.
Others simply have cards just in case, but rarely use them. Still other people have credit cards that they discovered too late had unfavorable credit terms and therefore will not use them.
If you do not use a credit card for a long period of time, especially years, a credit card company can close it. Regardless of the reason you choose not to use your card, having it canceled by the company is a bad thing.
The Effects of Credit Card Closure on Your Credit Score
Practically any activity concerning a credit card will affect your credit score. Closing an account will definitely have a noticeable impact. However there are a variety of factors which will help to determine whether the impact of the card being closed will be a major one or a minor one.
If your credit card that is closing is your oldest credit card, it may affect your credit score more significantly than with a newer card, as age matters when it comes to credit cards. If the card is one with a high credit limit, especially when compared to your other credit cards, the closure will result in you having less available credit, which always has a negative effect on your credit score. Try to avoid the closure of high limit credit card,
Who actually closes the account will also have a different impact on the credit score. It always looks more positive for the cardholder to close a credit card than for a bank to close the credit card. On a credit report, a notation that the card was closed by the lender is often interpreted as a sign that there were problems in the way the account was handled even if there is nothing negative noted on your credit report to support it.
What to do if a Bank Says They Will Close Your Credit Card
If you have been advised that your bank is closing your credit card, the first thing you will want to do is contact the bank directly and ask to stop the process in order to avoid damage to your credit score. Contact the lender and ask if the credit card can be kept open. You may need to talk with different levels of management to get the approval. You may need to agree to use the credit card more regularly and follow through with doing so. If this credit card is your oldest one in your wallet, it may be an especially worthwhile one to keep.
In the case that the credit card company does not want to let you keep the card open, ask if you can close it yourself and have it reported to the credit bureaus as being closed at the request of the customer. This is much more positive and will reflect better on your credit.
Should decide to close the credit card despite your efforts, you should expect your credit score to drop a little. The impact of the credit card closure is typically minimal. Your score should be back to normal within 3-4 months.
Getting Another Credit Card Following a Credit Card Cancelation
Having credit and available credit is important to your financial success because you need them in order to have a good credit score. Therefore you should carry and use at least two credit cards on a regular basis. If you had a credit card canceled due to non-use you should apply for another card that you will use in order to solidify your credit score. Be sure it has the same or higher limit. Following the closure of a card, you should wait three to four months before applying for another card if possible, so your credit score has time to stabilize.
Use a free online credit card chaser tool that will help you find the exact credit card you need to meet your needs when you are looking for your new credit card. You can find low interest cards, credit cards with rewards and much more. With a little help you can easily find a credit card that fits you and that will get used.
Knowing the right type of credit card to fit your lifestyle is important. Get started now with our credit card finder tool finding the right credit card for you!
- What should a letter to close a credit card account include?
- How do I close a credit card account?
- What happens with unused credit cards?
- How many credit cards are too many to own?
- How do credit card lines affect my credit score?
- Why are credit card companies closing accounts?
- Which credit cards should I close when consolidating cards?