Friday, November 15

Why your credit card was closed

Why your credit card was closed
| By Susan Lahey,

Even if you are not in default, an issuer can start at any time.

Maybe you have seen this already: will receive from the cashier, you pull out your credit card, swipe it, and says it will be rejected. You try it again. The same result. So you call the issuer and you find out that the account was closed, despite the fact that you still never too late with a payment. "What still?"

If you're confused, you're not alone. So something happens - and it is completely legal.

New regulations to help anything in this situation. The credit card Act of 2009 to contributed, to increase protection against interest rate increases and overlimit fees. But credit cancellation rules largely unchanged.

"While the current law for consumers has done many great things one of the areas where there was no help, financial statements or the reduction of credit lines," Deputy Director of national priorities for consumer action in Washington says Ruth Susswein, D.C. 'how much consumers will have a line of credit card companies are still in complete control, and how long you keep it.',

Of course, an issuer can cancel your card, if you fail to keep your end of the bargain. To pay, late (or not) exceed your credit limit, the failure to comply with your agreement or application of insolvency are all legitimate reasons for closing an account.

The reasons can however much less obvious than that credit card companies track your take on credit, and if anything the feeling makes them, that their credit portfolios of less are safe, when they want, can they suddenly pull the plug.

Sonya O. Conway, Vice President for public relations and communications at American Express, said in an e-Mail that the company cardholder credit behavior constantly monitored. "We look forward to a wide variety of items, including their history expenditure and payments with American Express, their debt/spending/payment history with other lenders, credit bureau scores and other credit report information", she wrote.

AmEx doesn't like what it sees, can reduce your spending limit or terminate your account. "Our intent is to the right balance between intake of our card members spending needs eliminating credit risk-also prudently to manage, for us and for our members find card", Conway wrote.

A similar policy follows Chase. The company rejected a requested interview for this story. Credit card contract is one of the reasons that your account is in default can apply Chase Freedom says, if the company believes you "can however not willing or not able to pay your debts on time."

Even if you are not in default, an issuer can start at any time. The most common reason is that you not use the account often enough. From the perspective of the issuer, it is better to give to someone who often use the map this credit line and collect interest. "Sometimes we close accounts that are not on your actions, or inaction, but on our business needs," reads the Chase Freedom agreement.

In Philadelphia, a consumer is trying to fight a cancellation, but found no improvement. Paul Dieffenbach Jr. lawsuit against citizens Bank was released from a Court of appeal in February. Judge confirmed the Bank law, Dieffenbach asked card despite the fact that he had never missed a payment and never to an increase in the credit line.

The Bank said Dieffenbach enough points for the assessment of accounts not in his system. The criteria the Bank reached its based on, "payments this month as a percentage of the amount due for the last month, maximum balance as a percentage of the loan limited the account has been opened in the last three cycles, duration and total cash balance as a percentage of total balances in the latest three cycles."

Information Dieffenbach was not to follow.

But because cancel accounts at the discretion of the card issuer, no laws or regulations violated if a bank is like.

Card issuers have not, to alert you if they plan to either cut off your balances. Under the CARD Act rules require the creditors account conditions in writing come to consumers 45 days before a rate increase or a 'substantial change'. Diffenbach tries to argue that a such a significant change was closing his account. The Court agreed with citizens Bank, which it does not.

In fact, creditors according to the equal credit opportunity act may close an account for delinquency, inactivity, or default without notice at all. If you close an account for other reasons, such as for example a negative credit report they must notify the cardholder 30 days after taking the harmful action. Not much good your meal with a map do, pay when you try, which is unexpectedly rejected.

"There is an obvious reason no notice necessary," Susswein says. "they do not dry up and collect a big Bill if you have determined that you're no longer economically viable. "In practice, which can anywhere from real pull, be a real problem."

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