Credit Card Closed By Creditor With Balance

What Do I Do When I Have A Credit Card Closed By Creditor With Balance?

You have a credit card closed by creditor with balance; it happens. Many people have had it happen – without warning their credit card is cancelled or their balance reduced to a level so low that the card may as well have been cancelled. Why does this happen and what should you do?

Why Balances get Reduced or Cards Shut Down

Having a credit card account closed by bank or getting a reduced credit limit on cards has always happened, but it seems to be a bigger problem since the financial crisis began in 2008, when people have been struggling more and banks are being a little more careful. There are two main reasons that your credit limit might be reduced or your credit account closed.

  • The first reason that your credit card is closed by creditor with balance is credit worthiness or behavior has changed. Credit card companies often do what is called a soft pull on your credit to see how things are going for you. They do this to see if you are worthy of increasing your credit limit or offering you a promotional rate, but sometimes the result is just the opposite. If they see something they don’t like they will sometimes reduce your credit limit or close your account. Such a credit card closed due to delinquency can happen if you have been late on either this card or another card. It can happen if you have recently gotten more cards and charged them up high. It can happen if you have a foreclosure or other financial issue. You can also have a credit card closed due to inactivity score, that is if you are not using the card it might be closed.
  • The second reason to have your credit cards cancelled without warning is that the credit card company has changed its policy. A card company might decide to end a promotion early either because it wasn’t accomplishing what they intended or because it was costing them too much money (read: people were taking advantage of it more than they expected). Sometimes they do this by canceling the credit card. Other times the company might re-evaluate their own standards. When they check your credit you may no longer meet their new standards which results in them reducing your limit or closing your account. It might not have been any change in your habits recently, just a change in how you fit their current model.
  • What You Should Do when Your Credit Card is Closed by Creditor with Balance

    Having a credit card company reduce your limit or close your account is frustrating. The good news is that the Credit Card Act of 2010 makes the credit card company offer you these new terms, giving you the ability to reject them and pay off your current balance at the old terms, but usually this means they close your card.
    Other times they will simply reduce your credit limit. If a company does this resist the urge to get angry and spitefully close the card. It’s actually probably what the card company wants you to do now that they see you as an increased risk, but it hurts you by damaging your credit score. Keep the card open, pay it off, and let it help you to improve your score through its longevity and low balance. One important point, though, if you do have a credit card closed by creditor with balance don’t worry – you can still continue to make your payments, as agreed. You will pay interest, but the payments will continue, you will continue to build credit – you don’t have to come up with all the money at once or anything.

    Credit Card Closed My Account: Moving On

    For many people the question becomes that of what to do now. You might wonder if you should try for a new card or if it is hopeless. That really depends.
    If your behavior and credit change caused the closure it is probably in your best interest to immediately check your credit score. Then, work on rebuilding and do not apply for new credit until you have built the score back up a bit. However, if you had a premier or gold card that was closed because of a minor credit fluke, but you still have a decent score, you might want to apply for a less fancy credit card – and you might get it. In addition, if you were dropped not because you changed but because the company changed their requirements you may be able to qualify for a card with another bank.

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