Why Issuers May Suspend a Credit Card Account

Having your card declined at the checkout counter can be alarming. Before you start panicking and fearing the worst, though, know that there can be several reasons for this. For one, it could be that your card issuer has only put your account on a temporary hold. During this period, you are not allowed to charge your purchases with your card. There are instances, though, when creditors cancel a card because of one or many compelling reasons. Note that all card issuers have every right to suspend a credit card account.

If you have had a credit card account cancelled, any of the following could have been the reason:

Card Dormancy

If you have not made any transaction with your credit card for some time, the issuer may decide to suspend your account. Years ago, when cardholders become dormant, they often charge fees for the inactivity. However, with the provisions set under the new CARD Act of 2009, creditors are no longer allowed to charge these fees. However, they are allowed to suspend accounts that have been inactive for a certain period. If you don’t want your account to be suspended, simply use it at least once every three months each year.

Payment Delinquency

Every card has a specified minimum amount that cardholders need to pay each month (unless they have a charge card). This is stated in your card agreement. If you fail to make the required minimum monthly payment even for just a single month, the card issuer may suspend your account. Some issuers may be more lenient, though, and may give you a chance to redeem yourself for up to 180 days. Nevertheless, if you miss the mark by then, you face the risk of having your creditor close or suspend your account.

Bankrupt Bank

If, by an unfortunate situation, your bank becomes unprofitable, they have the option to stop operating. This is bad news not only for the financial organization but also for the consumers. Most banks sell their card accounts to another issuer. In this case, your account will be temporarily shut down. You can reactivate your card by paying for it as if you are applying for a new card.

Miserable Credit Score

Universal default is no longer a threat to consumers, thanks to the CARD Act. This means that card issuers do not have the power to raise your interest rate simply because you were late in paying off a card from another issuer. However, even though this is the case, individuals whose scores suddenly plummet may experience account closure or termination.

Response Required

If your creditor has a new set of fees that will be soon imposed on your account, they will send you a notice regarding the upcoming change. You have every right to reject the new conditions. In return, the creditor also has the right to end your relationship with them through the cancellation of your account.

Fraud Suspect

This is the most typical reason why issuers suspend credit card accounts. If they have tracked down suspicious activities, your card will be put on hold. This is for security purposes but if this is your case, it is easy to reactivate your account. Simply contact your creditor and provide proof that you are the true owner of the card.

Suspension of card accounts can be damaging to your credit score especially if the accounts have outstanding balances. Contact the issuer as soon as you discover the account cancellation to immediately remedy your card’s status.