September 26, 2024

Can You Reopen a Closed Credit Card? What You Need to Know

Most people use credit cards every single day. So what happens when your account suddenly closes?

Banks close credit cards for various reasons, ranging from personal choice to the card issuer’s decision. In either case, a closed credit account can negatively impact your credit score and leave you in a pinch.

But can you reopen a closed credit card? And what happens if you can’t?

Why do credit accounts close?

Your bank might let you know your credit card account is closed for a number of reasons. Here are a few to know:

By user's request

The most direct — and most popular — reason why credit cards close is by request. Some people find the card wasn’t right for them or encouraged overspending. Others might just want to switch to a different provider.

Inactivity

Do credit cards close if they’re not used? Unfortunately, some banks do close accounts when you don’t use them for enough time. Maybe you forgot about the card, lost it, or just prefer to use a debit card. No matter the reason, most providers draw the line at some level of inactivity. It’s a good idea to ask your provider and know if there’s a minimum usage on your card.

Decline in credit score

Some credit cards have a minimum credit score, and if you can’t uphold the minimum, the provider might cancel your account. That’s because a low credit score shows you’re less likely to pay the bill, and providers want to avoid the risk of non-payment.

Lack of payment or overuse

If you don’t meet the minimum usage or repayment expectations, the issuer might also close your card. That means you have to meet minimum payments without accidentally going above your credit limit. Not only will you rack up high fees, but the provider might not trust you enough to keep the account open.

Breach or change of terms

When you sign up for a credit card, you accept its terms and conditions for use. Breaking the card's terms, like misusing rewards programs or exceeding credit limits frequently, can result in a card's closure. Some issuers also can change these terms over time, which can also affect your experience.

How to reactivate a closed credit card

Don’t panic if your credit card is closed due to inactivity, overuse, or any other reason. It is possible to open it again, but it depends on the credit card issuer’s policies and the situation.

Here are some general steps to reopen a closed credit card account:

1. Find the reason. Understanding why your account is closed can help you talk about it with the issuer. In most cases, they’ll let you know why and give you a warning before it even happens.

2. Collect necessary documentation. Take the time to collect relevant information and documentation, like your credit card details, recent statements, and personal identification. The lender will most likely ask for these items, and having them ready can speed up the reactivation process.

3. Contact customer service. When ready, call the issuer's customer service line to request the card's reactivation. The number may be on the back if you still have the physical card. If not, find the contact information on the issuer's website or an old statement.

4. Request to reopen the account. Once you reach an agent, politely ask the customer service representative to reopen your account. Be prepared to explain why you want to reopen it and address any issues that led to its closure. Some issuers may require a hard credit check to reactivate the account, which may temporarily lower your credit score.

5. Review the terms and conditions. If the issuer agrees to reactivate your closed card, review the new terms and conditions to identify any changes to your credit limit, interest rate, or fee structure. There might be new conditions, and the best way to avoid another closure is to follow the rules.

How to apply for a credit card you've had before

Some issuers won’t let you open your account again. But that doesn’t mean it’s time to give up. There’s a chance you can open a new account for the same card instead of going with the old one — and in many cases, this is actually the best option.

Policies vary by credit card company, so it’s worth asking what you should do and what they would prefer. Checking its policies on the topic is a solid first step. And remember, even if you’ve had the same account before, you have to go through the regular application process and undergo a credit check.

Do closed accounts affect your credit score?

No matter the reason, closing a credit card account can negatively impact your score. Here’s why:

Higher credit utilization ratio

Your credit utilization ratio is a metric that indicates how much of your available credit you regularly use. Most lenders favor people who don’t use too much credit (a lower ratio) because that means they don’t heavily rely on credit or risk underpayment. Closing a credit card can increase your ratio and lower your score because your overall available credit reduces.

Shorter length of credit history

Another significant factor in a person's score is the length of their credit history. Credit score calculations favor people with long credit histories who borrow and repay reliably. Closing a credit card, especially one you've had for a long time, can reduce the average age of your credit accounts and lower your score.

Smaller credit mix

Your credit mix — what types of debt or credit you currently have — also affects your score. A healthy credit profile has a good mix of credit, loans, and other types of borrowing.

Credit cards are revolving debt, which means you can use and repay it anytime and on an ongoing basis. For a borrower with multiple credit cards, closing one won't likely impact your credit score, but if the card is your only form of revolving credit, closing it affects your mix and therefore your score.

How to prevent your credit card account from being closed

Here’s how to effectively use your credit card and stay in your issuer’s good graces:

Use the card regularly. Use every card at least once a month. Even a few small purchases keep them active and avoid closure due to underuse. Connecting the credit card to a subscription service or another recurring charge is an easy way to automate regular use.
Make timely payments. Always pay your credit card bills on time. Late or missing payments can lead to account closure, especially if they become frequent or result in default.
Follow the rules. Don't go above your credit limit — in fact, don’t go near it to avoid overuse. Also follow the terms and conditions of your credit card at all times. It never hurts to read them over every once in a while to make sure you don’t miss anything.
Communicate with your issuer. If you’re facing financial difficulties, contact your card issuer to discuss possible hardship programs. This can help you manage payments and avoid account closure.

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Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

1. Calculated on the VantageScore 3.0 model. Your VantageScore 3.0 from Experian® indicates your credit risk level and is not used by all lenders, so don’t be surprised if your lender uses a score that’s different from your VantageScore 3.0. Learn more:

https://www.experian.com/assets/consumer-information/product-sheets/vantagescore-3.pdf