Credit card unless essential should not be taken, as with changing times it has become easier to secure a card now than previously. Banks now extend such a facility to even customers who have just opened their salary account and have salary as low as Rs. 15000 to Rs. 20,000. But in a case, when considering the financial flexibility the instrument offers, if you happen to have a credit card in place, you need to abide by certain rules such that it continues to function and the credit card provider does not cancels the credit card.
1. Keep using credit card in a time gap of 3-4 months: Some banks do not levy any charges for not using credit card while others charge an annual fee which can be waived-off in case the cardholder uses the credit card. Still, there are other banks that straight-forwardly cancel your credit card in case it remains inactive for several months.
To avoid such a situation, you need to adhere to the credit card terms which specify how frequently you need to operate the card in order to keep it active. Generally, it is advised to use the card every 3 or 4 months.
2. Do not stop making repayments: Against the credit card debt, you need to service minimum payment dues every month and if you stop making such repayments, banks may be forced to cancel your credit card account. In a typical case, one missed payment does not result in account being cancelled and there are instances wherein the card provider suspends the account for a short term and levies charges until the repayment schedule is commenced.
However, in a case when the non-repayment period exceeds six months or when the amount serviced by the cardholder is less than due to the credit provider, credit card is charged-off or closed.
3. Credit card is cancelled in case you deny an increase in interest rate: Credit card issuer before increasing interest rates or annual fee on the card, notifies the cardholder 45 days in advance, during which the card member can decide as to whether the new terms of higher interest rates are acceptable to him or not. In case the card member rejects the proposed terms, creditor will close the account and card holder then needs to pay off the account on previous terms.
4. When the credit card reaches expiration period: Every credit card comes with an expiry date that means the card remains valid only until that period. So, to continue using the card you need to exchange your old expired card with the new one.
5. Credit card issuer replaces existing card with new ones: This is also a common instance when your credit card issuing company may cancel your card as time and again it reviews its existing card portfolio and may get rid of some cards that no longer fit. But herein, an advance notice is to be sent to the card member detailing the deadline until when the card is to be closed and how to get a new card.
6. In case your credit score turns poorer: Credit score is a measure of your debt repaying capacity. And in a case when you delay or default on minimum payment dues and interest rate charges, your credit score is dragged down. And even at these occasions, banks may choose to cancel your credit card completely.
7. When credit card issuing company shuts operations: In a case when the creditor shuts operations due to profitability issues, it may cancel the credit card accounts with them. Also, there are instances when the card issuer sells their credit card accounts to a new credit card company.