What does a restricted credit card mean?
Quick insights
- A restricted credit card has limited functionality due to issues like missed payments, suspicious activity or an exceeded credit limit.
- Customers can work to resolve a restriction by contacting your credit card issuer and addressing the underlying problem promptly.
- To help prevent your card from being restricted in the future, you may want to consider setting up alerts for account activities like payment due dates.
What does a restricted credit card mean? If you’ve ever tried to make a purchase and found that your account has been unexpectedly suspended, you may have encountered a restricted credit card. When a card is restricted, it has limited functionality, which can disrupt your typical spending habits.
Restrictions can happen for several reasons, including missed payments or suspicious activity. In some cases, you can work to resolve the issue quickly by contacting the credit card issuer, though it may sometimes take a few business days or longer.
Let’s take a closer look at what restricted credit cards are, why this issue might occur and some ways to help restore your account to good standing.
What are restricted credit cards?
A restricted credit card is one with limited or suspended usage due to specific issues or violations of the cardmember agreement. When this happens, you usually can’t make purchases or request cash advances, and you may not be able to access your account online.
Restricted credit cards differ from blocked or canceled credit cards. A blocked card halts all activity, often for security reasons. A canceled card means the account is permanently closed and cannot be used.
You can typically resolve a restricted credit card by bringing your account into good standing and contacting the credit card issuer. It’s generally recommended to act quickly, as unresolved restrictions could eventually lead to account closure.
Reasons why a credit card might be restricted
Credit card issuers may restrict an account for a variety of reasons, often to protect both the cardmember and themselves. A few reasons why your credit card could be restricted include:
- Missed or late payments: Not paying your credit card bill could potentially result in a restriction.
- Suspicious activity: Unusual transactions, such as purchases in unfamiliar locations or large, unexpected charges, might prompt the issuer to restrict the card.
- Exceeding your credit limit: Spending beyond your approved credit limit might result in a temporary restriction of the card’s usage.
- Violation of cardmember agreement: Using the card for prohibited purchases or breaching its terms and conditions may also lead to restrictions.
- Inactive account: If your card hasn’t been used for an extended period, the issuers may restrict it as a precaution against unauthorized charges.
- Unverified account information: If the issuer cannot verify your identity or account details, they may restrict your card until you provide the necessary documentation.
Many credit card issuers will send an alert via email, text or app notification to inform you when your credit card is restricted, and they usually indicate the reason why.
Is it possible to un-restrict a credit card?
In many cases, you can work with the card issuer to lift restrictions, depending on the reason and your ability to resolve the issue. To un-restrict the credit card, you’ll typically need to take actions like:
- Contacting the credit card issuer and responding promptly to any requests.
- Resolving the underlying issue, such as making a missed payment or verifying account information.
- Checking for any unpaid credit card fees or penalties.
- Confirming the card’s status once you’ve addressed the problem and any issuer requirements.
How restricted credit cards might impact credit scores
A restriction itself may not impact your credit score directly. However, the underlying issue—such as missed payments or exceeding your credit limit—could potentially cause a negative impact.
Missed or late payments are often reported to the credit bureaus and may have a negative impact on your payment history, which is a factor that contributes to your credit score. Additionally, exceeding your credit limit can increase your credit utilization ratio (the amount of credit you’re using compared to your total available credit), which may negatively impact your credit score.
If you don’t resolve the underlying issue that led to the restriction, it could potentially escalate to an account closure. This might impact a range of credit scoring factors, including your credit utilization ratio, credit history and credit mix. It could also lead to a derogatory mark if the account is reported as “account closed by creditor.”
Ways to help avoid your credit card being restricted in the future
Some strategies to help avoid your card being restricted may include:
- Paying at least the minimum amount due by the payment due date.
- Monitoring your account balance and trying to stay under your credit limit.
- Signing up for notifications regarding suspicious card activity.
- Reviewing your cardmember agreement and avoid transactions that could violate it.
- Responding promptly to any requests from the credit card issuer, including account verification.
- Keeping the credit card account active. Making a small purchase every month or so may be sufficient.
In summary
Restricted credit cards have limited functionality and cannot typically be used for transactions. Some reasons a card may be restricted include late payments, exceeding the credit limit or suspicious card activity. You may be able to un-restrict the card by contacting the card issuer and resolving the underlying issue. Some ways to prevent future card restrictions include staying current on payments, staying under the credit limit and signing up for alerts regarding important account activity.
