Thursday, May 26, 2016

Stopped Using Your Credit Card: There Is a Fee for That


Due to the recession in 2008 and government shutdown, many banks and financial institutions are still reluctant to extend credit and are afraid of losing money. As a result, they are constantly changing the rules and implementing new guidelines for credit card holders. If you have not used a credit card in the past 6 to 12 months you are at risk for having your account closed or your credit limit reduced. If your limit is reduced or the account is closed, this will lower your credit score. If does not matter what your previous payment history was or what your credit score is.

Many credit card companies are doing this without notifying customers. If you have been a victim of this practice read your credit card disclosure agreement. If you don't have a copy asked the credit card company to send you a copy. Read it carefully. If it is not listed in your credit card disclosure agreement, then call the company and complain. Here are five ways to reduce your chances of having your credit limit reduced or your credit card account closed.

Order a copy of your credit report from If you have already received a copy within the past 12 months you can still order a copy from the website but you will have to pay a small fee of $6 per report from each credit bureau Experian, Equifax and TransUnion.

Check balances.
Review your credit card accounts and pay down debt on the cards with the highest balances to prevent the accounts from being closed or the limits reduced. For accounts that have not been used in a while and that have a larger limit, buy something cheap like milk and bread or a pair of socks and pay the bill off right away. Do this every 3 months to show activity on the accounts. 

You may want to close any credit card accounts that have not been used in 1 to 2 years that have a limit of $500 or less and have a zero balance. If you have more than one credit card in this category, you can close one of these types of accounts every year. This will prevent the credit card companies from closing your account and reporting the information on your credit report. This greatly lowers your credit score.

If you have an account that was closed and you use your credit card to make ends meet or pay for necessities, call the credit card company and let them know that you need your credit card.  They should be sympathetic and re-open your account if it was closed or increase your limit if it was reduced. If you are unsuccessful, call back and ask to speak to a supervisor. Follow-up all correspondence in writing. If that fails, file a complaint against the credit card company with the Better Business Bureau and Federal Trade Commission.

Find Extra Money.
Sell new and unused items on Amazon, eBay or Craigslist. Get a part-time job and find ways to reduce expenses. This will free up extra money to pay for necessities to make up for the loss of using a credit card that was closed or the limit was reduced.

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