Can you reopen a closed credit card account?
Quick insights
- Credit card accounts can be closed by the issuer for reasons like inactivity, fraud, delinquency or a big drop in credit score—or by the cardholder.
- Depending on the reason for the closure, you may be able to reopen your account by contacting your credit card issuer and discussing the specific circumstances.
- A closed credit card account can negatively impact your credit score by affecting your credit utilization ratio and the average age of your accounts.
Credit cards can offer a variety of benefits—from convenience to helping to build your credit. In general, these perks are well known, but there are other aspects to credit cards that are not widely understood. One of these aspects is credit card account closures, particularly why they happen and if these accounts can be reopened.
There are many reasons why a credit card account could get closed, whether by your issuer or yourself. Depending on the reason your credit card account was closed, you may be able to reopen it. In this article, you will learn:
- Reasons why your credit card account may have been closed
- How to reopen a closed credit card account
- How a closed credit card account on your credit report can affect you
- How to avoid credit card account closures in the future
Why was my credit card account closed?
The first step towards potentially reopening a credit card account is finding out why it was closed in the first place. If your issuer closed the card, you may be able to reopen your account by discussing it with them. They may have closed your account for several different reasons, including the following.
Inactivity
Your issuer may decide to close your account after seeing that it hasn't been used for a certain period of time (several consecutive months, for example).
Generally, if your account was closed due to inactivity, you may be able to reopen it.
Fraudulent activity
If there's suspicious activity or suspected fraud, your issuer may freeze or close your account. This activity could include:
- Unusual surges in account activity
- Large amounts of money withdrawn
- Charges to your account from places you don't normally buy from
Card issuers investigate suspicious activity carefully. If your account is closed because of fraudulent or suspicious activity, the issuer may keep the account closed, and you won't be able to reopen it.
Over-limit fees
If you make a transaction that is greater than the amount of money you have available in your account, you could be charged an over-limit fee. Depending on your credit card agreement, your bank may give you some time (for example, 30 to 60 days) to bring your account up to date before taking more action. However, if these fees accumulate and no payments have been made, your bank may consider closure.
Credit score
If you recently had a large drop in your credit score, an issuer may close your account to avoid further risk.
Reasons that credit scores can drop significantly include missed or late payments and a change in your credit utilization ratio.
Delinquency
The severity of delinquency is determined by a period of time in which payments were missed. For example, an issuer may give you about 30 days to pay your missed payment without it leading to a closure.
However, if you continue to miss payments or subsequent collections, your account could be closed due to this delinquency. This is otherwise known as a charge off, which happens when a payment hasn't been made on a debt for about 120 to 180 days. The issuer is still entitled to the full amount owed, and this mark on your card can last seven years on your report.
Having a charge off on your report is a sign to companies that you're not able to make your payments on time. This could make it harder for you to get approved for loans or other credit in the future.
A change in the card's terms
Credit card issuers sometimes update their terms and conditions. These updates can be minor, such as adjustments to certain fees, or more significant, like an increase in your minimum payment. If you are unable to comply with the new terms—such as making the required minimum payment—your issuer may close your account.
It's also possible for you to choose to opt out of these conditions, which will close the account as well.
Reasons why you may have closed your credit card account
An issuer is not the only entity that can close an account, and choosing to opt out of a change in your card's terms isn't the only way you can close your account. As a cardmember, you retain the power to close your credit card account for any number of reasons, including the following:
- Escalating annual percentage rate (APR) or other associated fees
- The benefits of the card and its rewards program don't apply to you as much as you initially thought
Now that you understand the reasons behind a credit card account closure, you can take informed steps towards trying to reopen your account. This next step involves contacting your credit card issuer.
Contact your credit card issuer
Once you understand why your credit card account has been closed, call your issuer's customer service to ask about reopening the account. When you do, you may be asked to provide some information, such as:
- Your name
- Your Social Security number
- Your address
Next, discuss why your account was closed and why you'd like to reopen it. Your issuer may choose to reopen the account or decide to keep it closed, depending on the specific details and circumstances around your closure.
What happens once my account reopens?
If your issuer decides to reopen your account, you should review the terms for any updates or changes in fees. This can help you prepare for additional costs or charges such as over-limit fees.
Consider discussing any potential changes or new fees with your card issuer, so you’ll know what to expect when your account is reopened.
What happens when there are closed accounts on my credit report?
When your credit card account is closed and remains that way, your credit report will show these closures sooner or later. When you lose access to your credit card account, you're losing that credit limit, which affects your overall credit utilization ratio and credit score. For example, when your credit card gets closed, your credit utilization ratio will generally go up. When this ratio increases, your credit score could be affected as well.
Additionally, when a credit card account closes, you may be lowering the average age of your credit accounts. The age of your credit card accounts is a factor that gets considered when obtaining a credit score. If you had an account for a long time that's suddenly been closed, it could impact your credit score negatively.
So if you don’t want this to happen to you, you can try to avoid getting your credit card account closed by taking some preventative measures.
How to prevent your credit card account from getting closed
Because a closed account could affect your credit score, maintaining certain financial practices is important for your credit health. Some ways to help prevent an account closure include:
- Setting up automatic transfers or payments to ensure that there's regular activity on the account.
- Making sure your contact information is up to date so you don't miss any notifications about the status of your account.
- Informing your issuer that your account is still active if you aren't currently making transactions.
In conclusion
There are many reasons why a credit card account could be closed—from inactivity to fraudulent activity to you choosing to close your own account for personal reasons. If you need to reopen your account, you may be able to do so by discussing it with your card issuer. All in all, using your credit card responsibly and being vigilant when it comes to fraud can help you avoid unsuspecting closures.
