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I have had a credit card with Bank of America for many years. I also have a long-standing card with another bank, a Sears card, and a newer card (< 2 years old), for a total of 4 credit card accounts.

On January 13 I paid off the full balance on my Sears card (~$600) and on my Bank of America card (~$1300).

On January 14, Bank of America sent me a letter saying:

As a result of a recent review, we have closed your above referenced account effective as of the date on this letter because you have a pattern of late payments on this account or another account...

I find the timing to be incredibly suspicious. While its true I have made some late payments in the past, in the last 6 months I believe I have paid everything on time, or early, so I suspect this was simply an excuse, rather than the real reason to close my account.

Is it common for a credit card to be closed immediately after paying off the balance in full? If so, why?

  • 3
    that happened to me with AmEx several years ago - except I'd never once had a late payment – warren Jan 28 '14 at 15:22
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    Did you pay late on a different credit card? If your credit score dropped considerably that might be the reason. Might want to check your credit report for any nasty surprises. – JohnFx Jan 28 '14 at 23:51
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    I don't think it has been stated, so let me add this bit of information. It is also a matter of what they consider "dormancy" which is unfortunately not consistently applied across all but seem to share the same principle of - if you don't use the card that much/or at all - you will be considered unproductive and so they will "evaluate" (term they prefer to use) and drop you (although in many cases they just reduce your credit considerably and raise the interest APR on the account). This also hurts your credit, so I always suggest, don't just ignore the cards, put some regular few bucks on em. – GµårÐïåñ Aug 24 '17 at 19:39
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Yes, it is possible that they wanted to get rid of you and waited for you to pay off your balance. I have heard of this pattern before.

If you're a flaky customer with late payments and carrying large balance - it is a sign that you may end up defaulting and going into bankruptcy. So once they had a chance to cut you off without any loss to them - they did. This is pure speculation of course, but it makes total sense to me, and I would do the same had I been their risk management person.

  • 1
    Why not close the account before I pay it off, then? – Flimzy Jan 28 '14 at 7:17
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    @Flimzy because they want you to pay it off eventually. Sometimes they do close even if you don't pay it off, I've heard of such cases. I guess it depends on the level of their jerkiness. – littleadv Jan 28 '14 at 7:20
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    @Flimzy would you still make it a priority to pay off the account, knowing it was closed and you couldn't use that card anymore? Closing the account right after you clear the balance guarantees they won't have to chase you for a single penny. – CactusCake Aug 24 '17 at 19:58
9

I've worked in a bank's collection department for 3 years and from my experience, these things do happen. Not all the time of course, but it does.

Banks usually have a way of scoring the financial behaviour of their customer i.e: debits, credits, payments for any form of borrowing etc. When a customer pose a future risk, as the bank, we'd take all the money that we can to minimize loss. Any payment is always welcomed of course, but by cancelling it (in this case the card), they've removed future risks from yourself.

At the end of the day, do not take it personally. The bank has tonnes of rules, procedures and SOPs that they follow and your account happened to be in their review and the outcome was unfavourable to you.

2

As a former banker, it depends on the institution or the card-issuer. For instance, the bank I worked at assessed a person's banking relationship in total. If a person missed one or two payments on a credit card, but held a large balance in their checking and savings accounts with no overdraft fees (ever), the bank wouldn't have assessed higher risk based on a missed payment. On the other hand, a late payment on a mortgage sometimes resulted in a person losing their credit card even if they had never missed a payment on their credit card.

If you only have a credit card with the bank (or credit cards), they are looking at how you've handled that (or those) card(s). If you have more of a relationship with the bank, they may be evaluating how you handle those other accounts, though generally the cancellation letter will indicate it was how you handled the credit card. One thing I will add here, depending on the legal situation, they may or may not be able to share with their partners (or vice versa); I remember that for a while, if customers didn't explicitly tell our bank not to share information, they could share data with other partners. If no laws have changed this, it's a simple call to the bank with a similar script to the below:

Hey, I'm John Doe of account 1234567890 and I want to ensure that my customer preferences [or customer profile] explicitly state that I do not want my information and [or] data shared with any of the bank's partners.

protected by Chris W. Rea Aug 24 '17 at 19:33

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