You might think your business finances are in order. You’ve earned good credit and you keep things simple by maintaining a single credit card. What could go wrong? Surprisingly, your credit card can be canceled with little or no warning and through no fault of your own. Three different businesses I contacted for this article have experienced this in the past month. So what do you do if it happens to you?
Get The Cancelation Information In Writing
Advanta recently closed all business credit card accounts. In correspondence to its cardholders it stated, “Substantially all Advanta accounts are funded by an independent trust. The trust has stopped funding activity. As a result, all Advanta business card accounts were closed.” Keep this type of documentation. It will be handy if your credit rating drops as a result of a wholesale cancelation.
Get the details of the account closure in writing. Find out, for instance, if you need to pay off the account immediately. Will pending purchases and already-written convenience checks be honored? What about the annual fee you just paid? Can you still redeem your rewards points? Having this information in writing can help clear up any disputes as your account closes out.
Stop Any Automatic Charges To The Account
Recurring payments automatically charged to your card may be missed if you don’t make alternative arrangements. That will cost you money and damage your credit rating. Examine credit card statements from the past year to identify all of your automatic payments, as some might occur annually. Common recurring charges include internet access, telecommunications, deliveries from suppliers, and your post office box renewal. Also remember to update your credit card information when you complete online transactions. Cut up your card and throw it out.
Check Your Credit Rating
According to information provided by Advanta, the statement “closed by the issuer” will not directly affect your credit score. But there’s a catch. The “utilization percentage” method of calculating your credit score depends on the percentage of available credit used. Since your amount of available credit just decreased, your score could be negatively affected. Check your credit rating annually, which you can do for free at FreeCreditReport.com. Knowing your rating should be sufficient. But if you want know your actual score, visit AnnualCreditReport.com or MyFico.com.
Get A New Card (Or Two)
You can research and compare credit cards online but online applications aren’t common. If you have an “invitation” from a company, you can usually apply online. Otherwise you’ll probably need to contact the company’s customer service department. Issuing banks often prefer that you see them in person. (Both Wells Fargo and U.S. Bank require this.)
Be Vigilant About All Your Accounts And Their Status
Finding out how your former credit card company is disposing of your information is crucial. Improper disposal provides an opening to identity thieves. As your account information and correspondence arrive, examine each item thoroughly. Be sure all your bills are being paid and orders placed on credit have arrived. Also make sure all charges are legitimate.
If your credit card account is suddenly closed, you’ll need to take immediate steps. Get a new card right away. Keep an eye on your credit rating. And see to it that all of your automatic payments are handled. If you keep a lightly used backup card, it will ease the transition.
Ellen Craig is a technical writer who has contributed to periodicals, Web sites, and high school and college textbooks. She can be reached at firstname.lastname@example.org.