What Happens If My Credit Card Account Is Closed?

So, you've seen that a creditor has closed your credit card account. What now?

Here are some common reasons cards are closed.

1. You’re in Default

If you haven’t made a payment for 180 days (6 months) or more, the company is likely going to close your account. If this happens, the credit card company will sell your debt to a collection agency, and that’s who you’ll be dealing with from now on. If that happens, the original creditor will no longer take payment as it is out of their hands. So, it is best to contact your credit card company before those 180 days to see if you can arrange a payment plan. Even if you feel like you cannot make any payment, many credit cards are willing to work with you. So call them, no matter how far you have fallen behind. If the account is sold, your credit score is likely to take a major hit if this happens, and the negative mark will likely stay on your record for seven years. You can also probably say goodbye to any outstanding rewards you hadn’t cashed in.

2. You Aren’t Using Your Account

It’s just as the old saying goes: Use it or lose it. If it’s been forever since you used your card, the creditor could close it for the simple reason they aren’t making any money from you. And it’s more than just an inconvenience to you, because your credit might take a hit when that happens. Why? Because the amount of credit available to you immediately goes down. That means your credit utilization ratio, one of the five important factors in determining your credit score, will immediately jump. And again, there’s those lost rewards if you have a reward card…

3. You’ve Changed (or They Have)

Has your credit score taken a major hit recently? Have you filed for bankruptcy? If so, these are reasons a credit card issuer might decide to close your account. Or they could be making changes, like phasing out the card you have or just no longer offering the terms they offered to you. Either way, it’s good to figure out exactly what’s going on and how it might be impacting your score. If it’s an error on your credit report that led to the closure, it’s a good idea to dispute that and fix it right away.


Another way the closed account can still affect your credit score is that the closure affects the average length of your credit history, which factors into your credit score. If the closed account was a longstanding one, it could negatively affect your score.

What can I do if an issuer closes my credit card?

Once a creditor closes your card, there are still a few steps you can take.

1. Get a free copy of your credit report by click on the Credit Sesame option above or below in this article. Check and make sure the account is accurately reported as “closed” or “closed at lender’s request.” Also scan your report for outstanding balances, and take steps to pay down these outstanding debts. This can help decrease your credit utilization rate and positively impact your score.

Keep in mind that closed accounts do not simply fall off your credit report, and you should periodically check your report to ensure that closed account information has fallen off your report after a certain amount of time:

Closed accounts paid as agreed can remain on your report for up to 10 years.

Closed accounts that have been charged off can remain on your report for seven years plus 180 days from the start of the delinquency that led to the charge off.

Closed accounts in collections can remain on your credit report for seven years plus 180 days from the date the account first became past due.

2. Contact the credit card company. Ask for an explanation of why the card was canceled. Sometimes talking it over with a creditor can be enough to restore the account; other times the decision will stand.

Either way, by contacting the issuer directly you may be able to find out why the creditor closed your account—and you may also learn of any mistakes you made with this account that you should avoid in the future.

3. Take time to reassess your finances after the card is canceled. Whether your card was closed due to inactivity or because of late payments, it’s time to assess how you’re currently using credit. Should you be putting small purchases on your credit card and paying them off immediately? Or should you stop using your credit card entirely until you’ve paid down your outstanding balances?

After your credit account is closed, concentrate on adding positive information to your credit file. You can do that by paying your credit card bills on time, keeping your credit utilization rate below 30 percent, and making periodic purchases to prevent your credit card from lapsing into inactivity.