How To Avoid Having Your Credit Cards Closed: These Are The Red Flags That Trigger Financial Reviews And Adverse Action Shutdowns

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There are lots of stories online of credits cards being closed by the issuer. Typically no reason is given for the closure, which creates lots of frustration. However banks don’t close down accounts for no reason.

American Express is known to occasionally perform a financial review. Typically this is triggered by abnormally high spending. They will ask for your tax returns and as long as you provide them you should pass the review. Your credit lines may be reduced if your taxes show significantly less income than you reported when you applied for the card.  You can also try asking if they will accept bank statements instead of your tax return. If you are living at home and are supported by your parents you can ask if they will accept their financial information. If you don’t want to provide any information you should just close the accounts yourself so that it doesn’t say closed by creditor on your credit report. If you have points you should transfer those to airlines before closing your cards.

Banks can also take adverse action at any time if they feel you are a risky customer. That means they will reduce your credit lines or close your cards.  Some people have successfully been able to get the bank to reconsider and reopen their cards, so it’s definitely worth trying to appeal. You can also file a complaint with the CFPB or your state’s attorney general if you feel you were closed down unfairly.

If you are shut down you should give it at least a year before you try opening another account with that bank again. Some banks have longer memories than others, so YMMV (your mileage may vary) on how long you will be blacklisted for.

In most cases you can still transfer out your earned points if you are closed down.

Typically these things can happen when you have several risk factors and the bank decides it’s too risky to have you as a customer. Some banks are stricter than others, but here are activities you should try to avoid:

  • Returned payments
    • There is no bigger red flag than paying off your credit card bill and having the payment returned due to insufficient funds. The credit card bank looks at this as a sign of a cardholder in financial distress. Autopay is wonderful for avoiding missed payments, but you need to be especially careful that there are sufficient funds in your checking account to cover the balance. A returned payment can cause an immediate closure of all of your credit cards with a bank, or a restriction on getting approved for new cards.
  • Inactivity
    • You should try to use your cards at least once per year. After a year of not using your card, banks often close down accounts due to inactivity.
  • Charging your own credit card.
    • If you charge your own credit card via your business or a relative’s business you are risking both your credit cards and your ability to process credit card payments.
  • Swiping your card for others
    • As I wrote about earlier this year, you should never swipe your card for other people. People involved in that scheme had their cards closed and found themselves in deep debt. If you wouldn’t hand over a briefcase full of cash to someone, then don’t hand over your credit card or goods that you paid for, that you can’t afford to lose.
  • Allowing credit card application farms to open cards in your name.
    • As I wrote about in the past, you should run away from ads offering cash to open credit cards in your name. People have had their accounts closed, found themselves in debt, and haven’t been paid what they were promised after handing over their social security number. Never give anyone your personal information and never give anyone access to your credit line.
  • Having a 3rd party pay off a credit card bill or deposit a check into your account.
    • Pay off your own credit card bills from your own bank account. Don’t deposit checks that aren’t made out to you.
  • Failing to pay the annual fee
    • If you are billed an annual fee and don’t pay it, the bank will close down your card.
  • Not paying your bills on time and/or carrying large balances.
    • These actions will lower your credit score significantly. If your score has a big drop it can trigger action from other banks besides the one where you had a late bill or carry a large balance with.
  • Cycling through your credit line multiple times per month
    • Banks give you a set credit line, which is the maximum risk that want to take on. Some banks will close down your card if you max out your credit line and pay it off multiples times in middle of a billing cycle.
  • Maxing out your credit lines.
    • Ideally for your credit score you want your billing statements to close with just a dollar of usage to show that you’re using the card, but using as little of your available credit on any given card as possible. However even if you pay off 99.9% of your bill before the statement closes, banks will not like seeing you use too much of your credit line as it can mean that you are racking up a bill that you won’t pay. Excessive and/or abnormal spend patterns can be a trigger for financial review and adverse action. As with everything in life, moderation is key.
  • Hitting a new card too hard.
    • When you get a new card you may be tempted to quickly meet the spend threshold to get the bonus miles. However putting large charges on a new card can cause a financial review, so take things a little slower if possible and avoid erratic spending patterns.
  • Transferring/Receiving Ultimate Rewards points to/from ineligible receivers.
    • You can only transfer or receive Chase Ultimate Rewards points between spouses/domestic partners or between co-business owners on a business card. Transferring Chase Ultimate Rewards points to others Chase Ultimate Rewards accounts may result in both the sender and the recipient’s cards being closed. You can however safely transfer points directly to an additional user’s airline/hotel mileage account.
  • Having too much total credit.
    • On the one hand, having a lot of credit is good for your credit score. But if your credit lines are far beyond the income that you report, it can be a red flag.
  • Excessive refunds.
    • Refunding too many purchases (or having refunds that exceed total card purchases) is a red flag.
  • Depositing excessive cash or money orders into a checking account.
    • Banks don’t like to see excessive cash or money order deposits into a checking account as it can look like money laundering. If you do that with a bank that you have a credit card with, it can cause a shutdown of both your checking account and your credit cards.
  • Suspicious or excessive wires
    • Banks are very careful these days with wire payments. It’s good practice not to make wire payments from a checking account with a bank that you also have credit card with, as a suspicious wire payment or excessive wire payments can trigger a shutdown of all of your accounts.
  • Paying for the mistakes of others at your address.
    • Typically when a bank does a financial review or decides to close accounts, they will go after all accounts located at the same address.

Have you experienced a shutdown? Did you figure out what triggered it? Know of other red flags? Were you able to get your account reopened? Share your experience in the comments!

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182 Comments On "How To Avoid Having Your Credit Cards Closed: These Are The Red Flags That Trigger Financial Reviews And Adverse Action Shutdowns"

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Jim

Dan-
Any words of wisdom regarding the practice of card piggybacking (services offer you cash in exchange for opening an authorized user card for someone trying to build/reestablish credit).

I’m uncomfortable doing it but many of my points and miles friends are into it big time. They argue the user never takes possession of the card and the bank can’t act on the AUs instructions.

Perhaps you can outline the risks?

AS

Transferring Chase UR to someone who is not your spouse or partner will trigger a shutdown of your accounts. FME, it took about a year for them to forgive and allow me to re-open chase CC accounts

Pointer

How do you even do that?

Previously I thought the only possible way of transfering btwn accouts was through AU.

David

I wonder if canceled orders are included in “Excessive Returns”?

Applepieone

Do all of the the above apply to business cards as well?

DD Lyfer

Great post!

Quick Question:

When Amex offers were able to be saved to all authorized users via the multi tab trick, I made a bunch of authorized users in my own name.

Now that the multi tab method doesn’t work anymore, should I leave them open? Should I close?

Ruvy

Anyone else here recently got shut down by Capital One Spark Business?

Marty

What was the reason they gave you?

Ruvy

“Inconsistent Purchases”
I never heard of a bank looking at your puchases to see if they are business related, that is taking it to the next level. Totally obsured.

YoniPDX

@Dan So charging a Biz card to an LLC of your’s through say Square attached to a Biz checking account.

Even if the invoice, list purchase of assest from one entity to another is going to be problematic, (I understand the tax implications, but is it’s really a huge redflag?) Say charging an Amex biz card to your Square business thats a LLC with a Chase Biz DDA that is being deposited, I unserstand how running GC through Square, can cause problems with Square. I can see how using a Chase biz card deposited to a Chase Biz account could be problematic.

Any DPs would be great, as I was actually planning on using this two kill two birds with one stone. TIA

Bh

I was red flagged by Amex for doing this with a chase biz checking account. Thanks god they didn’t close my account, was just a warning

YoniPDX

@Bh,. One more thing was your Chase Biz DDA – Chinese walled from all Amex payment accounts per/biz. I.e. never connected to any Amex card under your roof?

I’m curious what also or behavior got Amex eyes on the acct. I’m just trying to see if the issue was Square (even with LLC DDA account) . I understand the concern about ML for Square, also per chance was the processing on a charge card or 0% Apr 12-15 mo card.

Also curious if the flag might have been Square (processing) verus other or if it was industry connected to Square acct.

Just hunting DP.

My last Chase biz card app took 2x as long before it showed in my acct , ( I floated 80% of CL on 2 Ink 0% cards -paid them off a few weeks before app’ng,,) but also sent me a form letter, We were at close 50% CL/income before app’ng, but have Mortgage, auto and CU accts and cards, so that lowers our bust-out risk (and 20+ yr residence &Mortg). They reduced lines but still opened card, but sent me a Stern form letter about number of accts and amount of overall credit, thankful I saw writing on the wall and didn’t have to deal with hassle of FR or shutdown.

Thanks

David

My wife was shut down by amex years ago , I guess it was because a payment was made by a business that was blacklisted by amex.
Problem was that if they wanted to close my account why would they make you go a hell of a time with FR. if the case like my wife they first made her go through a FR , and after providing all tax returns that’s when they decided to close the account without giving reason which I assume it was bcs it was paid by a business account that was blacklisted by amex.

Mike

What would you think is worse for an amex business charge card. Returned payment that gets paid on the 2nd try ( amex tries 3 times before it’s actually rejected) or making the payment a day or 2 late?

Prr665

Issues with paying a CC bill in person with a money order? Been doing it for a couple of years but unsure of the risk.

joe

How do credit cards that dont have a set credit limit (e.g. Amex Platinum) show up?

Joel2

Same!

Shay

How bad is if 2 of my cards were closed down recently due to inactivity? (One is chase and I still have other cards from them, the other one was my only citi card)

JS

What about Amex BlueBird. A few of my friends and I got shutdown over the summer. They didn’t really give a reason.

Thanks for this informative post.

Joe

Can one transfer points between themselves and a parent? Once lived at the same address but not anymore.

yitz

what is Having a “3rd party pay off a credit card bill”?
if i have a friend send a bill pay from his checking account to my cc is that a problem?

Runnergirl

My were closed and Amex didn’t give me an option to transfer my points like chase does. Has that been others’ experience IYE?

pointer

Did you try calling the MR dept. directly ?

Runnergirl

And ask them to reinstate my points?

Dov

Depending on the amount of points lost it might be worth to hire an attorney that specializes in this field to negotiate this for you with amex

CFPB is a waste of time

Mo

@dov would you have a name of lawyer you would recommend ?

McDougL

Anything wrong with paying a cc with cash through the atm ?

Bank of America allows it (Chase does not)

Gaby

Citi only allows cash payments to credit cards through the ATM and the limit is 3k per month

Paron

Will being shut down on a bussiness card be reported?

Pat

If Amex closed all your accounts due to FR, how many years should I wait until I re-apply for amex cards?

Runnergirl

A few months

Doreen

Quick question Dan…. Would my credit score be affected if I close a card or 2 myself? Would there be any other ramifications by doing this?

Cook

Chase closed down all my accounts in one fell swoop easier this year, I called and had a quick review over the phone with an agent, asked me a couple of questions like why I don’t use many of my cards, and eventually reopened my accounts within a week.
I have been paying off my cc from other accounts and also had one or two returned payments over time.
No point transfers except to authorized users.
I had no way to ascertain the trigger from that phone call, agent was courteous but evasive when asked about trigger. BH it’s history now.

Fjdo

Wish I would’ve read this months ago. Opened Chase United cc and charged 10k on it which resulted in Chase closing all my c c. Have excellent credit score, never had a late payment or go above 30% of my credit limit. Was super frustrating!

Mo

If one is spending a lot on a business card will it help to make payments from a business checking account? On this note can someone open a business banking just like they would for a business credit card (I.e. use their SSN as a Tax ID and their name as business name)?
Thanks

Ilya

Barclays closed my jet blue Mastercard, which was crucial to me for Mosaic. I called, filed CFPB complaint, nothing. No reason given, would never tell me why. None of the triggers apply to me, great credit score, never missed payment. I’m totally lost, I was counting on it to have Mosaic status, there is no other card that works with Jet Blue

Mendel

Check your credit report. Maybe identity theft and someone did something fishy with your credit.
Otherwise. It’s the banks mishandling, but go try to fight city hall.

Ilya

I checked, and looked at all the charges, absolutely nothing wrong, all purchases at grocery stores or jet blue. Absolutely refused any reason.

Yidwl

Have the chase trifecta. Use my ink cash (almost) exclusively for staples GC during the promotion sales (about $25k annually).

Should I worry about shutdown?

Steve

Become a felon is a trigger. With Chase I had over 100k limit, never late, score over 800, they closed all my accounts.

Ron

Wow, who’da ever thunk being a felon was a red flag for a bank to extend unsecured credit?

Val

I’ve gotten quite a few credit card account, 20+ and many with the annual fees. Some of these with the annual fees (Marriott, Hilton, Hyatt, etc…) I no longer use them. As a matter of fact, I don’t use them on purpose because I have been under the impression that they will not close them as long as they get their annual fee (for which I am getting the free night). Now, if they closing all of my active Chase accounts (seven) because I rarely use some of them will be a disaster.

Srul

I opened a chase saphire prefered along with a freedom unlimited. I got approved for both but then got a letter in the mail shutting down my unlimited since i opened too many cards at once. How long should i wait before chase would approve me for other cards?

Seymour

I have a big purchase coming up, and would like to use my credit card. Are there any steps that I should take to decrease the chances of getting shut down?

YoniPDX

With new Chase cards. Previously I’ve called the 800 automated line that allows you to notify of large purchases, I did this for down payment $3K+ on new car, as well as large tax payment on a new CIP, as well as opening a CU acct, $3K+ for CIU all meeting MSR but also put a little organic spend on card prior to making a big purchase as well as ongoing spend Ink cards. But all the payments were <= 20% of CL. That was during my early days of my Chase churning journey. So not sure if this helps with keeping eyes off account but I would like to think it does.

But I also tend to go more conservative and don't Churn Chase bank accounts, have DD with Chase, and wait normally at least 120 days between Chase CC apps.

Sz

@Dan,
I got the sapphire reserved a few years ago, after a year downgraded from the card. Two years later (recently) I upgraded to it again.
Would downgrading again raise a red flag? (How much time should I give to downgrade)?
Thanks,

Grouper

Got a 13 year old amazon chase, plus 2-3 others shutdown when they decided to close my bank account. No reason given. Some habits that may have triggered the bank shutdown:
-Cash/3rd party credit card payments at the teller
-5 Money order deposits in same amount (under $400) in 2 months
-Cycling the credit (paying down credit card a few times during the month to spend more than the credit limit – hello prime day, hello buying groups)

Info I picked up along the way:
Chase and Citi HATE cash more than smaller banks. Would rather shut someone down “we reserve the right to do so”, than have to answer questions in court for aiding a terrorist/laundering scheme.

While you may request a formal review (HUCA HUCA), once a decision has been made to “terminate our business relationship”, there is nothing you (at least I) could do to get the accounts reinstated. Maybe my habits raised flags that were redder than others… Or maybe they are just plain stubborn.

Glimmer of hope: On my last call with the rep who actually reviewed the account and delivered the final verdict, he was deliberate when he told me that the decision was final as far as the closed accounts, but did not rule out being able to re-open a checking/credit card in the future.

Hope my experience save someone else from a headache.

ben

How long ago did this happen?
Did you try to reapply yet?

Elinyc77

No disrespect but I find it odd that you had to go through all of the above in order to understand and learn said lessons. Isnt it trivial that a bank like chase is wise enough to forbid all those shenanigans? Like who does that?

Grouper

Sheer ignorance on my part. Guilty as charged.

Had I read Dan’s post, 2-3 years ago, I would NEVER have:
Used 3rd party checks to pay credit card
Cycled credit limit
Deposited money orders

I was clearly ignorant and wrong to assume that Chase, the “big bank” doesn’t care much about, really, anything… I certainly never knew of a concept of “periodic reviews of our accounts” exists. Much less the “right we maintain to end a relationship without explanation”…

RS

Had all my chase cards shut down last year after applying and getting approved for Chase United Card (prior to spending any $ on it). Opening a new card is a trigger for a review by Chase.

Managed to have them reopened after speaking to representative and fighting my case – they had no valid reason to shut me down.

Steve

All of my wife’s and my capitalone cards were shutdown this year after I disputed a bogus charge from a vendor in Jamaica. I’m guessing disputing the charge prompted the wrong person to review my account and notice we had both met the $50k Spark Business spend in a short period of time with MS.

ben

Anyone has any experience with a shut down from Citi?

Citi just closed all my credit cards and checking account and they didn’t give me a reason. All they said is that we have a right to do it.

How long am i blacklisted for?
How long do i need to wait to reapply?

Anonymous

Did u get a call from {know your customer) with Citi they called me and asked my a bunch of questions about my spending and why I pay my credit card off with money orders all the time. And the truth is I’ve been earning 3.75 points per dollars on gift cards at the gas station. Then turn them into money orders and pay the card off I stopped that and it’s been over 2 months since the call I’m wounding if I’m in the clear of what I should do. Transfer all the points etc. any info from ur experience?

Abraham

I never like having a balance and constantly pay my bill throughout the month but don’t think I max my card collectively throughout the month. Is that risky?

Plastiq

Is paying CC with GCs through Plastiq will trigger red flags?

Mindy

If you do some of the items on the list on your chase accounts, (max out cards each month & pay it from a business account) is adding your spouse accounts in order to transfer your Ur points to her a trigger where the look to see if it’s your actual spouse (and then see the other item when mentioned)?

Mo2

“carrying large balances”

Is that an issue on Biz cards too?

Mendy

In middle of FR now. Spending $500k on amex business paying in full from two diff business accounts. They are asking for financials for business. Should I provide? The business can handle it.

chaim

you mention not spending too much on a new card,how about on a new business card.
businesses do spend alot so would that be a issue in a business

danfan

I’d like suggestions on what to do with a zillion money orders from Simon, Staples and Office Depot gift card liquidations. I don’t worry too much about the spending (high credit lines, no credit line cycling), but those MOs need to be put back into the kitty somehow to pay off the Credit cards.

Anonymous

Yes that’s what I did was open a bank at a local credit union and I actually told the guy I signed up with what I was doing but he was cool but they are so small that if they have a concern I can bring in the proof that this is not money laundering but manufactured spending and totally legal. So far 50K plus in deposits in last 2 months with no issues. But yea don’t use chase bank for deposits. I was for a little while sending the money orders back to the bank as payments but I felt like that was a bad idea so I changed my tactics.

Jeremy

If I closed my Amex 2 years ago for not wanting to provide tax returns when is it safe to apply again

ShmuliT

Is having a friend writing a personal check of his and then mailing it in as a CC payment to my account considered “Having a 3rd party pay off a credit card bill or deposit a check into your account.”?

chaim

yes

Sam

Even if the check is written out to Chase? Is this only with Chase or also with Amex?

Chaim

Dan-
Paying my cc bill with a checking account from an authorized user will trigger a red flag?

Glushtygiz

How about denying (alotta) charges

Maikar

Is billpay from amex serve a trigger for BIZ CC?

clr

anyone heard of the partners plus program that amex offers??
is anyone looking to apply for a business card and plans to spend over 1 million?

Johnny D

What about fighting a dispute with my capital one credit card. They say I haven’t provided them with a credit voucher from merchant where I explained that the merchant doesn’t have them and if I got a credit then why would I need to dispute a charge. How far is too far to push with your cc disputes team? Seems like the third dispute where they didn’t even file a reply to visa, they just denied the claim in house rather then push to visa… 🙁

Eli

My citi accounts are “under review” and no one on the phone can help me. They say I should wait for a letter in the mail. any experience?

iwlw2

How about if I have a 3rd party make a check out directly to chase and apply that as a payment to my credit card? Is that considered 3rd party? Thanks.

Shloimee

Dan thanks for the post.
2 questions:
(Somone asked this already but it wasn’t answered:) Is paying my Amex cc with my wife’s checking account an issue? She is a AU. Would it be better to pay from her checkong usong her login over mine?
Secondly, you mention paying the balance down to $1 before the statement prints. But if you do that, you kind of loose track of your total spending, because you can’t just add up your bills from each month after a year, for example, because you’ll only get a total of $12. Rather, now you’re going to have to go through reach statement, etc. Is there a way around this?

James

Hey Dan, quick question:
I fall on the AMEX financial review, so I quickly closed the accounts before they shut me down. How long do I have to wait to apply Will i get accepted if applied again? Thanks for the post!

IT

If a 3rd party check is made out to my name is that considered 3rd party when deposited to chase, also whats considered having a large balance?. Thanks

Herman

Regarding your sentence, “If you don’t want to provide any information you should just close the accounts yourself so that it doesn’t say closed by creditor on your credit report.” Why should that matter? It doesn’t affect the score OR any decisioning going forward. Thanks!

Chaim

Dan, I have a 75k credit line at chase on my cc, should I be concern and lower the credit line now if I have this already for a couple of years or would you just leave it the way it is?

Thank you in advance!

Jason

What about buying groups? Anybody have their credit cards or bank accounts shutdown due to excessively inconsistent deposits and statement balance amounts?

Grouper

See my comment above. 90% of my spending was for buying groups. They were excellent in paying me back on time – not endorsing anything here, just saying – but I used their checks to pay my card, and was cycling my credit limit to keep buying… clearly a perfect storm.

Avi

Hey Dan can you give a little more insight on this?

“Maxing out your credit lines… However even if you pay off 99.9% of your bill before the statement closes, banks will not like seeing you use too much of your credit line as it can mean that you are racking up a bill that you won’t pay…”

Did you mention 99.9% specifically? If so can you shed some more light. If someone uses their credit line to the max, what’s the best way to avoid to hurt your credit score.

TIA!

rj

Dan,
Thanks for the great info.

What about cards that are used exclusively for balance transfers but are always paid off before the interest period is triggered? Is that a red flag?

exShoYoGuy

Do all your AU need to have activity every year or as long as either one of them or the main holder does it should be okay?

Anil

@Dan Is paying CC bill with GCs using Plastiq will trigger red flags?

Mo

I’ve been AA’d by chase 2 years ago & tried recently to apply for a card & got declined right away.
Is there a time for how long they close u? Or is it possible it’s forever?

Miriam

Is using a biz card not for biz a trigger?

Miriam

Is paying a CC bill with a check made out to your name called a trigger?

Chavi

You have mentioned that Chase business cards won’t be reported on a credit report. Chase shut down my accounts almost 2 years ago and when applying for a BOA card recently, they declined me saying the reason was forcible shutdowns and listed accounts forcibly shut down and one of them was my Chase business card. They were able to see it.

Joel2

Wow!

Bh

Authorized user making payments from his personal account is a risk?

Shlomo

We sold points from my wife’s account. Chase got wind of this and shut her down. This happened about 7 years ago. Every two years we try to call Chase and explain that we have perfect credit and that we are sorry that we did it and will not do it again (I mean we bought a house and both have good jobs). My wife just recently applied and was turned down due to a “previous unsatisfactory relationship with us or one of our affiliates”. Do you have any advice to fix this mess? (We even tried speaking to a bank manager and he said that years ago if you had over 100k in the bank that they can make an exception, but that is history)

Ari

Great post. Thanks.
Just to clarify, if I open a new card every year to take advantage of bonus points, I’ll end up with a lot of cards over the years. Will that cause them to shut down my account for having a big credit line? I have a great score and no missed payments.

IT

Can any one please advise I’m in Israel and don’t have a way to deposit in my us account whats the safest way to pay my credit card bills.

Colin

Try the Transferwise App.

mordechai

Having an international AU using only for air travel is that something to worry about?

School

Used my business chase cc to pay for my school. Is that a problem?

zMay

Great post! Awesome DP in the comments!

What I haven’t read is…what about combining Chase points? For example: I do combine all of my points from all of my chase cards, personal and business in to where else than CSR! Could that be a problem?

@Dan ?
@…anyone?

Me

I just get shut down My Marriott card how bed is it?
It’s my only card with American Express
(how long will I have problems to open the card with) or I can open now a new American express card ??

Tzvi

What about Mile Account Closed?
Is there anything to do about it?

fan of dan

How often is safe to apply for ink cards? I got the ink preferred card 2 months ago, can I safely apply for the ink cash card?

@Dan ?

hirsh spitzer

Hi Dan, thanks for your advise, i got a phone call from chase that they want to ask me a couple of questions bcs my 3 cards are under review, i told them ill call back tomorrow. whats best they want to hear in order not to shut off my accounts. should i bring out my high income? should i explain i can use the cards more frequently? also should i pay off my balances there right away so when i speak it should be clean or rather should i start spend on it so they see i use it a lot? please let me know thanks loads!!!

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