Credit card issuers have the right to cancel your credit card at any time, however, they are required to provide you with advance notice before canceling your card, unless the cancellation is due to fraud or suspicious activity.
There are several reasons why a credit card issuer may cancel a credit card:
If you consistently fail to make timely payments on your credit card, the issuer may cancel your card as a result. Non-payment can have serious consequences for your credit, as it can lead to late fees, increased interest rates, and negative information being reported to the credit bureaus. If your credit card issuer cancels your card due to non-payment, it may also close your account and report the delinquency to the credit bureaus, which can damage your credit score.
High credit utilization:
Your credit card company may decide to cancel your card if you frequently utilize a large portion of your available credit. The credit usage ratio measures how much of your available credit you are actually using. Strive for a credit utilization percentage of 30% or less and strive to keep your balances low to prevent having your credit card suspended for high credit usage. To reduce your credit use, you might also try to bargain with your issuer for a greater credit limit.
If you do not use your credit card for an extended period of time, the issuer may cancel it due to inactivity. Credit card issuers often have policies in place to cancel cards that are not being used, as they may see these cards as a potential liability. In addition, the issuer may not be making any money from the card if it is not being used, so it may decide to cancel the card to free up credit for other customers. To avoid having your credit card canceled due to inactivity, it’s important to use your card regularly and make at least one purchase every few months.
Fraud or suspicious activity:
If the credit card issuer suspects fraudulent activity on your credit card, it may cancel the card to protect your financial security. Credit card fraud can occur when someone uses your credit card without your permission, or when someone tries to use your credit card information to make purchases or take out loans in your name. If the issuer detects suspicious activity on your credit card, it may freeze your account to prevent further fraud. The issuer may also cancel your card and issue you a new one with a new account number to further protect your account.
Changes to terms and conditions:
The credit card issuer may cancel your credit card if it changes the terms and conditions of the card and you do not agree to the new terms. Credit card issuers often make changes to the terms and conditions of their cards, such as changing the annual percentage rate (APR) or adding new fees.
Changes to your credit profile:
decide to cancel your credit card. Credit card issuers often review the credit profiles of their customers to assess their creditworthiness and determine whether they are a good risk for lending. If your credit score or financial situation changes significantly, the issuer may revaluate your creditworthiness and decide to cancel your credit card.
A credit card provider may cancel your account for the reasons indicated above. It’s important to understand the terms and conditions of your credit card and to communicate with your issuer if you are having difficulty making payments or if there are changes to your credit profile. Ignoring the problem will not make it go away and can ultimately lead to the cancellation of your credit card.
Read More: How to Apply for a Credit Card?