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Credit Cards Getting Canceled For Lack Of Use

Here is an interesting twist on the current credit crisis – credit card issuers are now canceling cards that go unused over an extended period of time. In an effort to mitigate their risk exposure, credit card companies are lowering credit limits and shutting down dormant accounts.

While this is going on, many card issuers are also raising rates on their customers. And of course, a great many credit applicants are being told thanks, but no thanks when they apply.

Remember when it wasn’t so long ago that you could just transfer your high interest rate balances to a new 0% APR credit card? Not anymore. Sure, those introductory offers are still out there, but you better have pretty darn good credit to qualify for them.

Here is another rub to the cancellation of credit cards. 30% of a consumer’s FICO score is tied to how much you owe versus how much credit is available to you. If your credit limit is lowered while maintaining a high balance on your card, your credit rating will more than likely be negatively impacted.

What You Can Do

First off, do not under any circumstances miss a payment. Do not pay late… not even a day. If you do your credit card company will most assuredly use that opportunity to justify jacking up your rate to the 30% APR level. Credit card issuers are being hit hard by defaults and are looking at all possible avenues of recovering lost revenue.

Pay down your card as aggresively as you possibly can. I know, easier said than done, but you must do it. Paying down your balance is the only way to get leverage on your credit card company. Remember, as long as you use less than 50% of your account balance it does not negatively impact your credit rating.

Call your credit card company and explain your situation. In many cases you will be surprised at how receptive they are to working with you. It is very important that you comport yourself in a professional manner. That means be honest about your situation and be respectful to the person on the other end of the phone.

It is also helpful if you have a plan on how to work a fair compromise with the issuer. If you are prepared you will have a real nice shot at working out a deal that is advantageous to you. In any event, it is most certainly worth a try.