What to Do If Your Credit Card Is Closed

The issuer may restore your account with the previous terms, or it may request that you reapply for the card.

woman flipping a closed until further notice sign
(Image credit: Getty Images)

Even those with good-to-great credit face hurdles at times, particularly if you forget about a card collecting proverbial dust in your wallet (opens in new tab). Credit card issuers can close your account due to what's known as "inactivity," meaning you haven’t used the card in a certain amount of time—let's say a year or more—and the issuer now assumes you have no use for that account. However, if even an account is closed all is not lost. You may be able to remedy the situation—especially if it’s a card that you relied on as a backup to your everyday credit card. Plus, keeping a card card active may have benefits for your credit: a canceled credit card may ding your credit score because it reduces your total amount of available credit.

In general, card issuers don’t want to close your account because it’s hard to find and keep a good customer, says credit expert John Ulzheimer, author of The Smart Consumer’s Guide to Good Credit. Use cards you want to keep just often enough to keep them active. You could use the card to automatically pay a recurring bill, for example, such as your gym membership or a subscription. When the bill comes in, pay the entire balance to avoid triggering interest charges. Or shop around for a card that has a lower rate, or a cash-back (opens in new tab) or other reward's program that’s better suited to your spending habits.

Do I Get Closure Notice?

Your credit card issuer is not likely to tell you if it plans to close your account. However, if you’ve signed up with a credit-monitoring service such as Credit Karma (opens in new tab), you may receive an alert. If that happens, call your issuer right away to see how to get your card reinstated. The issuer may restore your account with the previous terms, or it may request that you reapply for the card. If you lost points because of the closure, ask if those can be reinstated as well—although the issuer has no obligation to do so. If your card is restored with a lower credit limit, wait six months and then ask for an increase.

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If your credit score took a hit, reinstating your old credit card or applying for a new one should boost your score. When an account is closed, the amount of available credit decreases, which impacts your credit-utilization ratio—the amount you owe as a percentage of your total available credit. This ratio accounts for 30% of your credit score. It’s best to keep your balances around 30% or less of your available credit.

Rivan V. Stinson
Staff Writer, Kiplinger's Personal Finance

Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. She's now a staff writer for the magazine and helps produce content for Kiplinger.com. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher.