How would you feel if you received a letter telling you that your credit card is being closed? Would you panic? For many people, this scary scenario has become a reality. They were carefully making their monthly credit card payments only to find out that their credit card account was going to be closed. Now, they’re left alone to find out what to do next.
If you’re in this position, try not to worry. Having a credit card closed isn’t necessarily the end of the world. You’re just going to have to change a few things. Here’s what you need to know.
When a credit card account is closed, you don’t have to pay it off immediately. Your account is closed simply means that the account is no longer open to new charges. If you were trying to pay off your credit card debt, this change isn’t a problem. You weren’t charging anything to your card anymore, anyway. Your terms are frozen as they are (minimum payment calculations and percentage rates), and you can continue to make payments to pay off the debt.
Now, if you are still using your credit card, your position is slightly different. You’re going to have to change the way you handle your monthly expenses. Do you have several payments on auto-pay? Even if you don’t carry a balance on your card from month to month, you’re going to have to change these auto payments. Turn off that auto payment, and find another way to make these payments. Don’t wait until your vendors are unable to process your payments to start making these changes, or your credit rating will suffer.
Finally, you may want to replace your credit card. Although I don’t want to encourage anyone to use more credit cards than they have to, there is certainly a time and place to use them. I like to take a credit card with me when we travel. If that card were closed, I would want to replace it with a different one. Take your time, though, and select a card that works for you. Pay attention to interest rates and annual fees.