Whether you use them for online transactions or to buy something from the malls, keeping your credit cards in use is wise. Today’s generation is so much against debt their credit cards end up accumulating dust.
Doing so can lead to various issues regarding your credit score. We research why credit cards get closed and how you can proceed if that’s an issue you recently faced.
Why Was Your Credit Card Closed?
The most common reason for credit card closing is inactivity. Credit card issuers track your card activity and analyze how actively you have used the card.
Credit card issuers will likely close your credit account if your activity status remains “inactive” for a year or more. You may not receive any notifications before the issuers take this step.
You can use third-party notification services to remain alert and stay updated with your account activity. Doing so will help you strategize a potential game plan or block the move before it’s finalized.
Impact of Credit Card Closing
The most devastating impact of losing your credit account is the hit on your credit score. Your credit score reduces when your card is closed because of inactivity. The 15% impact on your credit score can massively affect your credit limit.
Moreover, the amount of loan you may receive and the interest rate depend on your credit score, whether for a mortgage or a car. A closed credit card will affect your long-term plans as well.
How to Proceed If Your Credit Card is Closed
Many people become disheartened once their credit card closes. Don’t worry, there’s a way to remedy the situation instead of giving up and accepting “fate.” These are some of the steps you can immediately take to remedy the situation.
Contact Your Credit Card Issuer
No credit card issuer likes to hurt their client relationship by closing the credit card. Contact your issuer when you find out your credit card is closed.
They suggest two ways: applying for a new credit card or restoring the account. The restoration may work in your favor, though you’ll have to talk out any potential credit limit changes. Reapplying for the card is a different issue; you’ll likely have to start from scratch.
Use Your Credit Card Regularly for Small Payments
Once you get your credit card back, old or new, ensure using them for recurring expenditures. For instance, a cashback credit card for grocery shopping can save money and keep your card active.
You can use your credit card for your subscription payments too. Keeping the card active even for menial payments will keep it from closing due to inactivity.
Make Timely Payments
Apart from inactivity, not paying credit bills on time is a big reason for closing credit cards. Hence, it would help if you avoided it by making timely payments that save you from unnecessary interest.
Ask for a Higher Credit Limit After Six Months
If you begin using the newly issued credit card on a lower limit, that’s okay. Keep using the card for six months consistently and then apply for a higher credit limit. Your credit card issuer will likely accept your request seeing the activity.
Using credit cards for small regular payments can keep them from closing while allowing you to build or sustain your credit score. Following the above tips, you can keep your credit card from closing and use your credit score wisely for a rainy day.