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Excellent credit, yet issuer cancels her card

 
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May 8, 2014
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QHi Erica,

I had a credit card with Bank of America, as well as a mortgage that I have had for 22 years. I only used my credit card for small purchases to keep it active. I recently bought tickets to Europe for my family and me using my Bank of America credit card and used $3,500 of a card that had $10,000 credit available. I have no credit outstanding on an American Express. I received notice 10 days later that my Bank of America card was being canceled after I used it for the large purchase of tickets. My credit score is in the 800s, and I have no outstanding debt except a Lane Bryant credit card with a $200 balance. I called Bank of America and paid the $3,000 in full two days after receiving the letter and asked them how it was possible after all these years. The excuse that was given to me was a low economic climate, and they need to be proactive. By the way, I only owe $75,000 on my mortgage. I've been a good customer with Bank of America. How can they do this? –Kay

ADear Kay,

It does seem weird that a financial institution that you have done good business with for so many years would treat you this way. Counterintuitive, even. From what you wrote, you have everything that a bank seeks in a customer. Your FICO score is in the highest category, which would indicate a perfect payment history and a low credit utilization ratio, as well as a lengthy and positive history with not only the bank's credit card but its mortgage. You even have a well-managed retail card plus an American Express card in the mix, showing variety in a credit portfolio. Bells and whistles? You've got 'em!

Still, every issuer maintains its own policies regarding who gets to have and keep its credit card, and they don't have to advertise what it is. Therefore, it is impossible for me to say exactly why Bank of America canceled your account.Ask Erica

All issuers retain the right to close accounts at will, and they don't need to give you, their own customer, more than a brief explanation outlining their decision. It is standard procedure for issuers to constantly monitor your consumer credit report activity. If they spot something they don't like, even on another bank's account, they can simply lower your credit line or shut it down entirely.

Because you haven't done anything glaringly wrong, such as default on a loan, let bills go into collections, or get into a massive amount of debt, in all probability it comes down to a lack of charging activity. Bank of America might have decided that you just weren't using its card enough to make it worthwhile for you to have it. For some reason, those airline tickets triggered action on the bank's part.

As irksome as this may be, the good news is that you have a lot of great credit. You still have your American Express card, which is an ideal travel form of plastic. (Just make sure you can use it in Europe well before you're due to leave. Amex's point of sale and ATM systems have changed to the chip-and-PIN technology. Upgrade now.)

At least two forms of credit while away from home is recommended, so I would suggest you obtain a new credit card, too. If you still want to give Bank of America a chance, you can apply for another card with them, but I can certainly understand why you'd want to take your business elsewhere.

More good news: Presuming you have a steady income, you qualify for premium accounts. Cards with fantastic rewards programs, low interest rates, and few fees are reserved for people just like you — those who have borrowed and repaid responsibly over many years. Check the deals in the “excellent credit” category, as well as those in the “rewards.”

The credit world is your oyster, and now you get to pick the brightest pearl in the lending sea. And when you do, use it at least a little more frequently than you did with the defunct Bank of America card, so you don't get cast adrift again.

Got a question for Erica? Send her an email.


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