Credit card canceled without warning?

Has your credit card been canceled without warning or for no apparent reason?

The Associated Press is reporting that consumers across the country have been reporting such problems, specifically with bank MasterCards that are co-branded with oil companies.

Citibank confirmed the practice, AP reports. Citi said in a statement it “decided to close a limited number of oil partner co-branded MasterCard accounts.” That includes Shell, Citgo, ExxonMobil and Phillips 66-Conoco cards.

No law, AP said, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit card agreements.

Have you experienced this? Should the law be changed?

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140 comments Add your comment

jennifer

October 20th, 2009
3:59 pm

I can cancel my credit card at any time. Why shouldn’t they be allowed to do the same? The last thing we need is MORE government interference in private enterprise.

Chuck

October 20th, 2009
4:05 pm

I had a Wa Mu card for years. As soon as Chase bought them, card canceled. Never late, over the limit, and I have a great credit score. makes no sense.

AH

October 20th, 2009
4:05 pm

But they owe me that card it’s mine

stace

October 20th, 2009
4:06 pm

Sure, my credit card cancelled me for not using it. Thats ok, I tore up the card and got one from another back. No harm no foul. If they dont want me to have their credit card then why should I care. I will just take my business elsewhere. I never used them anyway.

Im with ya Jennifer. Keep the government out of my private business.

Chris

October 20th, 2009
4:08 pm

Jennifer, I agree with you overall…But the problem with the bank cancelling a credit card is that, if you are one of the type to not pay your cc in full each month…When cancelled (with no advance notice from the company)the balance is due IN FULL. This can really through some folks into financial upheaval.

Scott in Atl

October 20th, 2009
4:08 pm

it seems that the general public is as ignorant and uninformed as ever. What ever happened to reading contracts before you sign them? Or is it the big corporations fault too that the contracts are too long and the fine print too small?

True

October 20th, 2009
4:13 pm

@ Jennifer, that is true that you can cancel your credit card at anytime, but you have to inform them that you want the card cancelled. They problem with this is that the credit cards were cancelled without notification. It seems that it is a legally binding practice but do you think that this is fair? What if someone had an emergency and was depending on that card?
On a side note to everyone out there reading this, please take the time to read all your contracts before you sign on the dotted line. This includes myself because I know I don’t read over every single thing as carefully as I should. This situation seems unfair to me, but unfortunately there is really no leg to stand on with this clause listed in the contract.

Fred

October 20th, 2009
4:13 pm

Cash…..it’s the only way to go.

Lola

October 20th, 2009
4:15 pm

Chase cancelled my Visa because I had not used it in a few years. But losing that $9,000 line of credit doesn’t look too great on my credit report. I called and asked why they would cancel my card without giving me a chance to decide if I wanted to use the card or not, and they said that was not their policy.

F. U. Citibank

October 20th, 2009
4:16 pm

Sure, the taxpayers bailout Citi to the tune of $320 billion. And Citi fires back at the taxpayers with anti-consumer contempt.

F.U. Citi

If the government wasn’t in Citibank’s business, there wouldn’t be a Citibank. Citi should not be spitting in the face of the citizens who financed their bailout.

DG

October 20th, 2009
4:17 pm

I’m confused. They won’t let me cancel a card if there is a balance but they can???

Disgusted

October 20th, 2009
4:17 pm

The problem? For the consumer, it’s likely a reduction in the credit score, and for no debt-related reason. Part of the credit score is the ratio of credit line to credit used. A reduction in the total credit available invariably results in an increase in the debt/credit ratio and a decline in the credit score. That’s why a cancellation can be adverse for a consumer, even if that consumer has met all repayment terms. And going for a different credit card won’t help. Your credit score gets marked down every time you apply for new credit or even a new insurance policy. Every time you initiate a transaction requiring a credit check, you nick your credit score.

Nick P

October 20th, 2009
4:21 pm

@Jennifer…you can close your accounts…with the FULL knowledge that it may affect your credit score and rating. When banks do that…they hurt you…because your available credit goes down which factors into your credit score and rating. You think that exercising free private enterprise?

mc

October 20th, 2009
4:21 pm

The problem with “reading contracts before you sign them” is that almost all credit cards are run by just 2 or 3 companies and all have almost exactly the same contract. Antitrust laws, anyone?

AH

October 20th, 2009
4:21 pm

The borrower is a slave to the lender… end of story.

Winston

October 20th, 2009
4:22 pm

To Jennifer et al. who say yes because of some fine print after years of being a faithful customer they should just cancel you, I say think again. First of all it adversely affects credit rating by arbitrarily by increasing ones debt ratio. More importantly, no ones travels overseas or far distances with wads of cash so how would you feel if you were overseas and are ready to pay a hotel bill and all of a sudden you card declined?

Green Machine

October 20th, 2009
4:24 pm

Let them take them all…it is time to GO GREEN and stay GREEN!!! I love Ben Franklin’s Century card the best anyway! Just keep in God We Trust.

Kevin

October 20th, 2009
4:31 pm

MC, no they’re not. Quit spreading mis-truths.

Don’t have debt, and you don’t have to worry about credit scores. It’s that easy. If we all lived within our means, we could truly cripple the credit card companies. But that would mean we do without, and that’s not how we roll.

Ms Dee

October 20th, 2009
4:36 pm

Surprise to see this article I thought it was just me. My Discover Card was cancelled couple months ago. I had no balance on it waiting for the holidays. So are the credit companies targeting people now for not using the cards on a monthly basis for the high finance charge?

Dave Ramsey Fan

October 20th, 2009
4:37 pm

As Dave says…Debt is Dumb! Cash is King! If you never need credit who cares what your credit score is!

True

October 20th, 2009
4:39 pm

@ Kevin, you are not totally correct either. Credit is used more than you think. Two major things that come to mind are insurance and even some employers are looking at credit. I should know, I work for an insurance company that does both. Now you might say if you never had credit, in turn no debt, then you should be okay? Not exactly. Even no credit history can adversely affect a person.

Jenny S

October 20th, 2009
4:39 pm

@Kevin – Amen!!!

Nikole

October 20th, 2009
4:43 pm

Credit is necessary even for people that live within their means. I am a teacher and I would like a house. Are we suggesting that I save up until I can buy a house outright? It is unfair to negatively impact my credit by canceling a credit card when I have not done anything to deserve it. Perhaps the way credit is determined should be modified.

Marcos

October 20th, 2009
4:45 pm

Not mentioned is what happens to your credit score when you are canceled? I imagine Equifax would drop you quite a few points!

Debit free

October 20th, 2009
4:46 pm

The credit card companies take on a lot of risk and in a struggling economy it only makes sense for them to limit their exposure. They are experiencing higher default rates than ever before and with unemployment not improving at the moment I’d say they are going to continue to drop customers. It may be painful to some, but being forced to live with in your means due to lack of a credit card is a good thing in the end.The shocking thing to me is that some actually think they are entitled to these cards as if it were a constitutional right.

Cash is King. Credit cards are merely an invitation to go into debit.

Joe

October 20th, 2009
4:48 pm

Is this a news story, a column, or a solicitation?

J-Lin

October 20th, 2009
4:48 pm

I hate folks that say keep the government out of this, keep the government out that. I guess they prefer to get screwed by some entity’s who’s main goal is to make a buck no matter what.

I bet Jennifer doesn’t even have a credit card and knows nothing about her credit score. All she’s knows is the rent is paid every month on the double-wide.

Disgusted

October 20th, 2009
4:49 pm

Just try renting a car during a trip without adequate credit. And if you’ll look at one of your credit reports, you’ll see that many types of companies are checking on your credit without your permission–mortgage firms, credit card companies, insurance companies, etc. Your credit score even figures into how much you are charged for insurance. So this “just live on cash” line is simplistic, to say the least. If you decide to ignore your credit score, you’d better have a ton of cash available.

Mike M

October 20th, 2009
4:50 pm

Hey Jennifer, if we had some REASONABLE regulation in the banking industry, we wouldn’t have had the financial meltdown we just went through. So some government “interference” is necessary to curb the greedy. Oh, and by the way, my finance’ just had her Bank of America Mastercard cancelled without notice. The reason: inactivity–she hadn’t used it in a while

David

October 20th, 2009
4:51 pm

Agree with Jennifer – it’s a signed mutual contract with the credit agencies. If you don’t like the terms, don’t sign up. YOU DON’T NEED A CREDIT CARD! Listen to Dave Ramsey and learn how to live without one.

Steve

October 20th, 2009
4:52 pm

I canceled all my cards and I put them all on auto pay thru my bank. I use cash to pay for everything I need. The credit card companies were worried about my credit score during my conversation process to close my accounts. I said ” I want my score to match my soon to be balance 0″ . Cash is King.

J

October 20th, 2009
4:52 pm

This didn’t happen to me, but the law should be changed so that there’s at least a 30-day period between when the COMPANY cancels a card and when the balance is due in full. If the person fails to pay after that 30 days, then it’s in the company’s hands, but if the balance is due in full at the time the card is canceled, and especially with no advance warning from the company, then that definitely can disadvantage some people who may be relying on that card for gas expenses or some other emergency.

I don’t have an oil-company-connected credit card, so I’m not sure what the contract between the company issuing the card and the cardholder might say, but be sure to read the contract to make sure that there aren’t any provisions in there that may disadvantage you unnecessarily. If there are, you might want to look at another credit card company.

And True is right – I don’t technically have a credit card that’s solely in my name, so I don’t HAVE a credit history; I hate the credit card I do have, and don’t really see the point of hassling with a credit card when I budget each month. BUT because I don’t have a credit history, I can’t rent an apartment without a cosigner, places are less likely to give me credit when purchasing something, and my student loans aren’t nearly as good as they could be because I have no history of paying down a debt. It’s a rather complex situation – bad credit is bad, but no credit isn’t good either.

Moshel

October 20th, 2009
4:52 pm

The CC companies are doing this because the laws are getting ready to change. Every one of my credit cards informed me that my interest is now going up and changing from a fixed rate to a variable rate! This is crazy! Always pay on time, more than the minimum, never ever late, good credit…..It’s affecting everyone; just watch for more changes before 2010 law takes affect. So much for this law protecting the consumers….it’s ruining everyone’s credit!

michael

October 20th, 2009
4:53 pm

Chris,,,,that is not true . if they cancel your card you DO NOT owe the full balance at one time.

GA Girl

October 20th, 2009
4:54 pm

Dave Ramsey has also filed bankruptcy so he got a fresh start. This will force people to file bankruptcy and then the credit card companies get nothing. There’s my bailout back at ya!!

Debit free

October 20th, 2009
4:54 pm

And there are other ways of getting, maintaining and improving your credit sans a plastic card. I.E. small personal loans, car loans and of course just paying all your bills on time. As far having to pay more for insurance because of lack of credit it is easily offset by not paying the exorbitant interest rates and fees of these cards.

Noah

October 20th, 2009
4:56 pm

If they cancel your card the balance is not Due Now as stated above. You can still make payments to pay it off.

MM

October 20th, 2009
4:57 pm

Wrong Chris I work for a cc company when the company chooses to cancel the account the balance is not due IN FULL upon cancelation, you are still able to pay the balance over time as long as you pay as agreed.

smitty

October 20th, 2009
5:00 pm

Michael is correct!! If your card is cancelled payment IS NOT due in full immediately. No futher credit is extending, but the cc company still wants your interest!!!

Tarheel

October 20th, 2009
5:00 pm

It does not seem fair in this economy that banks, etc. can cancel the card of a good customer for no logical reason. However, if the customer chooses to pay the balance and cancel the card, it then is negatively reflected on one’s credit rating. Clark Howard says to keep your cards active but only charge once or twice a year. Not everyone can afford to pay off the balance monthly, especially in case of high-cost emergencies, etc. It used to be one needed a good credit score for home buying, etc. If all our credit cards are cancelled, then what???

Deacon Meyers

October 20th, 2009
5:00 pm

To Bad the Credit Cards Companies are cancelling the credit cards. Remember, God wanted good little Christians to apply for a much credit as possible. Afterward, you need to max out your credit card and any line credit to enjoy life until THE RAPTURE. We can have those Liberals Hippi pay high rates when THE RAPTURE take all the God Fearing Christian to heaven on judgement day.

Remember, Reverend Joel Osteen wants live life of luxury until Judgement day.

Sandra M

October 20th, 2009
5:00 pm

I agree with Disgusted. Credit cards are unfortunately a necessary evil. You need at least one. It would be great however, if the credit reporting companies stopped dropping your credit score if a creditor dropped you through no fault of your own. I have a Citibank card and just received notice that my rate is going up to 29.99%. I hope to be able to pay it off before it goes into effect next month. I intend to keep it open and active with minimal charges because I believe that in about a year, Citibank will be changing its rules again, especially for people who’ve never been late, and will probably drop the rates.

Seriosly?

October 20th, 2009
5:02 pm

If you’re not using the card and it carries no balance, why should they continue to do business with you? It costs them money just to keep that inactive account open. And they don’t make you pay the balance in full unless it AMEX.

Noah

October 20th, 2009
5:05 pm

Ga Girl — Why would it force someone to file bankruptcy on debt that is unsecured. So someone will lose their house and everything just because a credit card is closed. The person still doesnt have to pay the CC off any sooner then they would have otherwise.

bumpers

October 20th, 2009
5:06 pm

Had chase card then country wide bought it.soon after that the card canceled .I called them, always pay on time and way more than the min payment but they did it anyway I was a “credit risk” again not even close to the limit always on time and more than the min paid. What I got in return for being a good cust was canceled and a higher apr which is not ajustable because the card is canceled .I smell something funny going on here

Nique

October 20th, 2009
5:11 pm

Sandra M You do not need ANY credit cards anymore. Cash or Debit cards are enough for ANYTHING you need to do. Its called BUDGET and live within or below your means. A Debit card will get you anything that a credit card will get you but you pay cash instead of relying on debt.

GA CCs Yes, Debt Zero

October 20th, 2009
5:15 pm

For @Debit free, I think you mistyped your name and it should be “debt” free not “debit” free. If you pay for everything in cash you are likely using your Debit Card frequently.

Anyone who has credit cards and never has a balance, like myself and spouse, paying more for insurance (due to credit a low score) will always be more costly than having a great credit score and lower insurance payments. There’s nothing to offset that higher cost.

Those out there with credit cards being canceled, I feel for you. Not everyone has the same reasons for not using a credit card. We had one credit card that was never used and we had just been too lazy to close it, however Citi “kindly” closed it for us. We received an explanation letter in the mail about 45 days prior to the card expiring. This mailing looked like a normal credit card application mailing. It explicitly said that the card was being closed because it had no activity. If I remember correctly it also had a comment that this would be a paper mailing and an e-mail to ensure communication.

I would suggest to everyone that all mail, even if it looks like trash, is at least opened and glanced at before trashing. There was an article recently on WSJ that people were unaware of interest rate changes because they throw out paper mail before reading it.

Nard

October 20th, 2009
5:16 pm

To the clueless Jennifer: stop being overly paranoid about the government. You need to be equally concerned with corporations who exploit people to make a profit. What you fail to realize is that when your credit card is cancelled your credit score takes a hit. If all the credit card companies did the same your credit score would be lowered and these same companies would use that to justify charging you higher interest on mortgages and other types of credit. This could destroy your ability to get credit to open a business, buy a home or car or finance and education. Stop blindly following the ditto head dogma and use your brain! Lack of regulation is whta got us into this mess!

Noah

October 20th, 2009
5:21 pm

If you have a good score having a credit card cancelled isn’t going to make you subprime. Everyone either is blaming the government or looking to it for all the solutions. If you signed up for the CC you need to abide by the terms which include the fact that they can drop you and you can drop them. Its a free market, you can fire them and go somewhere else, do it. Its time to change relying on your open cc line as a safety net anyways

Jose

October 20th, 2009
5:23 pm

Kinda would like to see it go back to the old days. Buy what you need and leave the rest on the shelf for clearance or for the dry rotting. Stores had their own local credit departments and layaways to get your purchases. People weren’t so heavy in debt either. The greed in having the best, living exclusive areas, being stuck up, wasteful, trying looking better than the next person, robbing Peter to pay Paul has gotten you into this pickle. Let them beg you to spend your money and not you be so freely with your money is the only way for them to give you respect in the future. Christmas is coming up, don’t spend nothing on nobody. You have enough junk already that you don’t need to buy anything. If you have those that don’t appreciate what you give them, let them be the first on your list of the not giving. Cash and carry is the best way to go now. Banks aren’t giving you any interest on your deposits so why would you want to carry a 30% rate of interest on a credit card. I had people laugh at me and called me cheap but I am the one that is having all of the fun. When FICO came along, that’s when the credit issues went to hell in a hen basket. It gave a business a reason why they should charge you more on interest. Instead of you all fighting back then, they increase credit lines to offset that. Now, you have higher interest and no credit line. What will you do now? Bite the bullet and start paying all of that crap off and not let it back in your pocket. I have always said that the only thing that is in my back pocket is my ass. It’s only up to you if you allow them in your pocket. Having good credit, they treat you worse so don’t feel bad if you have bad credit because you are still special and it isn’t the end of the world. Life goes on and just enjoy it.