One time when Rick Niles, a resident of Laurel, MD. Was on his way home from work, he stopped by a gas station to fill up. He usually pays using his Shell Citi credit card so when he was informed by an attendant that the card will not go through he was surprised. He thought to himself maybe there was a problem with the station's card machine or it is those occasions where cards for no apparent reason do not work.
Later he found out that his credit card account had been cancelled by Citibank even if he had been religiously paying his bills on time and had a good credit rating.
Unfortunately, there was nothing illegal with what the card company did and currently there are no laws in place criminalizing such acts. There is an apparent loophole in Federal laws whereby a supposedly unjust practice of cancelling cards without any advanced warning by issuers is perfectly legal.
Credit card companies, however, justified this long-standing practice saying that if card holders were given notices of cancellation they would take advantage of the situation by running out their balances.
Ruth Susswein, an executive of a consumer watch group, says that issuers should give card holders at least 30 days notice prior to cancellation.
Meanwhile in Congress, the issue about credit card cancellation practices were not tackled during sessions on credit card reform mainly because there was not a critical mass of cases of accounts being closed without notice to warrant a probe or action. However, today with the worsening economic conditions, credit card cancellation has been on the rise.
Citibank on their end, refused to offer a clear explanation as to why there had been a marked increase of Shell Citi bank credit card cancellations lately, other than to say they are constantly evaluating business practices to better serve their partners and clients.
There are several reasons why credit card accounts might be abruptly cancelled, such as inactive cards, low credit scores, and the card line itself not being profitable enough.
Customers though who have been victimized by this type of practice could still turn to alternative sources of credit such as credit unions or community banks. If they feel they have been treated unjustly, they could also file a complaint with the issuer itself.
It should be noted too that some credit card companies who try to modify a particular credit plan, would go over existing credit holder information and would take out those accounts that they see will not be a good fit in the modified plan that they are developing and envisioning.