What to do if your credit card account is closed

By Rivan V. Stinson
Excerpt from Kiplinger’s personal finances

Question: My credit card the company closed my account for “inactivity”. Is there a way to restore my card?

Answer: Credit card issuers may close your account due to what is called “inactivity”, which means that you haven’t used the card for a while, say a year or more, and the sender now assumes that you have no use for this account. .

However, even if an account is closed, all is not lost. You may be able to remedy the situation, especially if it’s a card you’ve been relying on as an alternative to your everyday credit card. Additionally, keeping a card active can have benefits for your credit: a canceled credit card can affect your credit score as this reduces your total amount of available credit.

In general, card issuers don’t want to close your account because it’s hard to find and keep a good customer, says credit expert John Ulzheimer, author of The Smart Consumer’s Guide to Good Credit. Use the cards you want to hold just often enough to keep them active. You can use the card to automatically pay a recurring bill, for example, like your gym membership or membership. When the bill arrives, pay the full balance to avoid triggering interest charges.

Or shop around for a card that has a lower rate, or a cash back or other rewards program that better suits your spending habits.

Your credit card issuer is unlikely to tell you if they are considering closing your account. However, if you have signed up with a credit monitoring service such as Credit Karma, you may receive an alert. If this happens, call your issuer immediately to find out how to get your card reinstated. The issuer may restore your account to the previous terms, or they may ask you to reapply for the card.

If you lost points due to the closure, ask if these can also be reinstated, although the issuer has no obligation to do so. If your card is restored to a lower credit limit, wait six months and then request an increase.

If your credit score has taken a hit, reinstating your old credit card or applying for a new one should boost your score. When an account is closed, the amount of available credit decreases, which affects your credit utilization ratio, which is the amount you owe as a percentage of your total available credit. This ratio represents 30% of your credit score. It’s best to keep your balances around 30% or less of your available credit.

(Rivan V. Stinson is a staff writer for Kiplinger’s Personal Finance magazine. For more on this and similar topics, visit Kiplinger.com.)

©2022 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are intended for general informational purposes only and should not be construed or construed as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personal finance advice. Epoch Times assumes no responsibility for the accuracy or timeliness of the information provided.

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