A reader received two cards instead of one because of the bank’s error, and the issuer wants to cancel one and transfer the balance to the other, pushing her over her credit limit.
Unfortunately, that is what happened to reader Kelleye. She writes that she was approved for a credit card, and the issuer actually sent her two of the cards. She activated and used both of them, and has made payments on them for two months.
After that, she got a call from the company to tell her that issuing two cards was actually an error on their part. To rectify this mistake, the bank is going to close one of the accounts and transfer the balance on it to the other card.
Kelleye is concerned since transferring the $3,000 balance on the shutdown card would cause her to go over her credit limit, and also negatively affect her credit score. According to her, both the accounts are in good standing.
Banks can cancel credit cards at their discretion
Unfortunately, banks have the discretion to cancel existing card accounts for various reasons, even though the consumer is not on board with the change. For instance, if you are delinquent on your account, default on your payment or don’t use your card for a period of time, they can cancel your account without advance notice.
They only need to inform you within 30 days of their closing your account, even though that means consumers could be caught on the wrong foot. More innocuous reasons for card cancellations could include when the issuer has discontinued certain card brands.
In emailed comments, Nessa Feddis, counsel for regulatory compliance and policy with the American Bankers Association, noted, “An issuer may cancel a card when something has changed in a borrower’s credit profile that suggests they may not be able to repay. A less common reason is when an account has been dormant for a long period of time.”
Along the same lines, a spokesman for Bank of America said, in emailed comments, that the issuer would consider closing down an account either when a customer hasn’t used the card for a long time, or “when a cardholder’s risk profile has significantly and adversely changed from when we underwrote the account.”
Card cancellations could hurt your credit score
Whether initiated by a consumer or the issuer, card cancellations could have an impact on your credit score, and Kelleye is right to be concerned about this.
For one, a card cancellation affects the total amount of credit you have available to you. This means you could be using more of the credit you have at your disposal, pushing up your utilization ratio. And if you have a long history with the card, it could also decrease the average age of your accounts.
In Kelleye’s case, moving over the balance on the canceled card to the other one would also cause her to go over her credit limit, which could also have a negative credit score impact.
See related: What happens when you go over your credit limit?
Negotiate with your card issuer
Kelleye, it seems yours is an unusual situation. According to Bank of America, “We have numerous controls in place, as well as limits to the number of cards our clients can receive, in order to eliminate this scenario.” Of course, that’s small comfort to you.
Kelleye is based in Maryland and wants to know what her rights are in this situation, while she is waiting for a manager from the card company to call her back. In the meantime, the card company has not taken any action on her account. In emailed comments, Courtney Weiner, a Washington-based attorney who also practices in Maryland, said, “There are no legal violations by the credit card company that are jumping out at me, unfortunately.”
Considering that the card company has not violated your rights, it seems your best bet would be to negotiate with the manager. You could ask for a higher line of credit on the remaining card so that you do not go over your credit limit. It seems that would mitigate your loss.