Cardholders have certain rights that protect them as consumers. Subsequently, credit card issuers have rights, too, including the right to suspend credit cards anytime. There are times when cardholders don't even receive a notice about the cancellation. Probably, the worst way to discover that your card has been suspended is to have it rejected at the checkout counter.
An account can get suspended for several reasons. These include the following:
You don't use your card for several months.
When the new CARD Act of 2009 was implemented, card issuers were no longer allowed to charge inactivity or dormancy fees. However, it is not stated in the law that they can keep the account active. Hence, the issuers can easily terminate an account if not used for several months. To be on the safe side, you should use your card from time to time -at least every three months.
Your account is delinquent.
If you have not paid your card bills for quite a long time already, the issuer may choose to terminate your account. In order to keep your credit card, you have to pay the required minimum payment every month. Many card issuers don't suspend an account because of one missed payment. However, they will put your charging license on a temporary hold if you don't pay within 60 or 90 days. Most companies completely close an account if the cardholder does not pay his balances for six months or 180 days. Note that the interest rates and the penalty fees still rack up even while the account is suspended.
Your credit history has gone from bad to worse.
Universal default is a scheme where card issuers increase interest rates due to late payments of a cardholder with another card issuer. To the CARD Act of 2009, this is unjust and is, thus, banned by the said law. The creditors can choose to close an account, though, if they see that your credit score has gone down drastically.
Your creditor has gone bankrupt.
Not all card issuers are successful in their operations. Therefore, they are forced to shut down because of lack of income. Unluckily, cardholders are affected. Your previous creditor may sell their current accounts to a new issuer. This deal will cause your account to be closed. Thankfully, it is only temporary, which means that you can reactivate your account by contacting the new card company that bought the accounts.
Your creditor suspects fraud.
Suspicious activities can cause your account to get suspended. All card companies keep track of their consumer and business accounts. When they find out that a particular credit card is performing something suspicious, such as charging overseas with an unusually huge amount or purchasing in bulk during midnight, the company may contact the cardholder to authorize or reject the charge. If you don't respond to the message, your account can get suspended. You can reinstate your card by confirming the transaction.
When your card gets canceled, expect that your credit score will be affected, particularly if the card has a large balance. This is because your credit utilization ratio increases since you have greater amounts owed than your available credit. The only way to solve this problem is to reduce your balance to repair your credit score.