Some credit card users just find that their credit card has been blocked or closed but they don’t understand the reason behind it. However, your card issuer will most probably notify you before doing so, but still, it will always be a bad surprise to check your notification bar and see a message saying ‘your credit card is going to be blocked by this particular date.’ If you are someone who has faced the same thing but didn’t understand why it happened, we are here with this article to make you understand all the possible reasons why card issuer may close or block your account. Read on to know more:
Reasons Why Your Card Issuers Blocks Your Account
Your Card Has Not Been Used For a Long Time
If you keep your credit card unused for a long time, your card issuer may close/cancel it. It is because the card issuer gets benefits only if you use your card and if it’s unused, they might think that you have just nothing to do with it and hence may close or block it. However, all the credit card issuers have different policies for the same. Every card issuer has a different specified time period within with if a card is not used even once, it gets canceled. For example, HDFC Bank closes the credit card of any customer who has not used his/her card for six months straight. This time period can also be of years for some issuers and you must check for yours. However, a written mail, email, or message is sent to you before closing your card in order to notify you about the same. So, if you have kept an unused credit card for some purpose, like to maintain a low Credit utilization or to maintain a good average age of accounts, you must try to use that card at least once every six months.
You Miss Payments Very Often
The most important thing to do when using a credit card is to pay your credit card bills on time so that you can keep yourself in a healthy financial condition. When you miss or delay your credit card payment, you are not only charged a late payment fee, but it also has an adverse effect on your credit score. But, these two are not the only consequences of missing your payment. If you repeatedly miss your payments or you make payments too late, your card issuer may consider you as a risky borrower and hence may cancel your credit card. So, you should try not to miss credit card payments. If you can’t pay the full outstanding, at least pay the minimum due amount by the due date and pay the full amount as well as soon as possible.
Rotating Money Via Credit Card
Rotating money via credit card means paying your credit card bill with the same credit card. However, there is no direct method of doing this but some people manage to do it by some indirect means. For example, some individuals first reload their mobile wallet on any digital payment app and then pay their credit card bill through the money available in their mobile wallet. In short, they borrow from the card issuer to return to the same card issuer, which is not the right way of making payment. If you do any such activity, your card issuers will surely recognize it and hence they will close your credit card. So, it is advisable for you not to follow any such indirect method to pay your credit card bill.
You Often Spend Beyond Your Limit
In order to keep your credit account in good standing, you are not even supposed to use 100% of your credit limit, but some cardholders often spent beyond that. Doing this doesn’t only charge you an over-limit fee but your card issuer also considers you a risky borrower. If you frequently make spends beyond your credit limit, your card issuer believes that you are very much in need of money and hence you may default payments. This makes the card issuer consider that you are someone with irresponsible financial behavior and they might close your credit card account after some time. So, you should try not to spend beyond your credit limit and try to utilize only 30% or less of it if you want to maintain a good credit score. If you feel that the credit limit provided to you is not enough, you may get another card with a higher limit.
Your Credit Score Is Dropping Fast
Even if you are making timely payments of a credit card, but your credit score is dropping fast due to some other reason, which may be late payments of another card/loan or anything, there are chances that your card issuer will close your credit card when they notice this drop. So, you should not only focus on the payment of one credit account and try to manage all your credit account well. Moreover, keep other factors also in mind, such as credit utilization ratio, credit mix, the average age of accounts, etc.
A Fraudulent Activity is Suspected On Your Card
If your card issuer notices any fraudulent or suspicious activity being done on your credit card, they might instantly block it until you give them a confirmation about whether you are making that transaction or not. For example, if an unusual purchase is being made using a card that you have never made before, your card issuer will either call you for confirmation or will just block your card. This step is taken by the credit card issuers in order to ensure your card’s security.
These were some of the major reasons why card issuer may close or block your account all of a sudden. Most of the time, it is due to your irresponsible financial behavior, but sometimes the reason may be just to ensure the security of your card. It is advisable for you to use your card responsibly and wisely so that your card issuer doesn’t cancel your account. Don’t get multiple credit cards if you can’t manage them. Sometimes one card is more than enough if you choose it wisely keeping all your needs in mind. Even if your card is unused, but you want to keep it with yourself for emergency situations, make sure to use it once every few months so that it doesn’t get canceled. We hope that you will keep all the above points in mind. If you have any sort of doubts regarding the topic, make sure to ask us in the comment section below!