You’re car broke down while you were traveling. Luckily, you were able to find a mechanic to repair it for you quickly. Unluckily, when you went to pay for the repair, your credit card was denied. When you called the credit card company, you learned your card had been canceled. The representative would not tell you why the card was canceled, only that a letter was on its way with more information.
Finding out your credit card has been canceled without notice can be a devastating experience, but it’s happening recurrently around the country. Thousands of credit cards have been canceled or had their limits cut recently with no prior notice delivered to the cardholders. People have been stranded far from home, in emergency rooms, and other awkward, embarrassing, perhaps even dangerous situations when they learned their credit card had been canceled. Even consumers with excellent credit ratings and perfect payment histories have fallen under the credit card axe. Why?
Reasons Credit Cards are Being Canceled
As the economy worsened and more consumers were forced to default on their loans, banks and other lenders became nervous, more cautious of risk. Many of them began to take measures to safeguard their businesses. Interest rates rose, credit limits lowered and, in many cases, accounts canceled completely.
Until recently, the most common reasons for closing an account were either inactivity or a history of delinquent payments. Now, however, even if a consumer has paid perfectly, the credit card company may choose to cancel the card because they have “done some reassessments”. They are now looking closer at things like debt-to-income ratio, credit reports, and other account details. If anything is considered an unacceptable risk, the account is closed immediately. The only activity allowed will be the receipt and posting of payments.
Is it Legal to Cancel Credit Cards Without Notice?
There are no laws requiring credit providers to notify customers before accounts are instantly closed. The Equal Credit Opportunity Act only requires notification to be sent within 30 days after the actual closing.
Did the Credit Card Accountability, Responsibility and Disclosure Act of 2009 change that fact? Unfortunately, it did not. Although there are now stricter notification laws regarding the raising of interest rates and several other procedures credit providers use, it did not ban the canceling of credit card accounts without notification to the card holder.
Credit cards have been both a blessing and a curse to the American economy. Because of the repression, many people who were able to responsibly manage credit card debt are now fighting a losing battle to maintain their financial foothold. Even if your credit cards have not been canceled, if you feel overwhelmed by the burden of those debts, you may want to consider discussing your situation with a Minnesota bankruptcy lawyer. A knowledgeable attorney can explain Minnesota bankruptcy and help determine if bankruptcy is a solution you should consider.