Manatt Partner Discusses Credit Card Cancellation Spike
“Use It or Lose It: Issuers Quick to Close Dormant Accounts”
December 4, 2011 – In an interview with CreditCards.com, Manatt’s Barrie VanBrackle, a partner in the firm’s Corporate & Finance Practice Group, discussed a recent trend among credit card issuers of cancelling customers’ inactive cards.
CreditCards.com, a website that offers credit news, advice and tools to help enable smart selection and use of cards, reports that the credit industry has been “battered by heavy losses” and is cutting credit cards to potentially mitigate risk, which may include cutting more than $2 million in credit lines in the next 18 months. Other cutbacks could include raising interest rates and closing millions of accounts. Consumers with dormant accounts have already reported canceled cards, which could negatively affect their credit scores.
Industry observers advise consumers who’d like to keep their dormant accounts open to use their cards for small purchases that can be easily paid off. Other recommendations are that consumers should carefully read the notices they receive from their lenders and review their user agreements for terms.
VanBrackle says it’s up to consumers to protect their credit cards – and their credit scores. “There are no guarantees these days, and credit card issuers are canceling cards left and right.”
She adds, “Consumers can only use the cards. The credit card company, being the issuer, holds all the cards.”
Read the article here.
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