Ask an Expert: Card Canceled After It’s Paid Off?

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A Money Talks News reader wrote me recently with this interesting question…

I’m hoping you can offer some advice about what I can do to reopen my account with American Express. I’ve had an American Express Delta SkyMiles Card since 2003. Since then, my credit has decreased, particularly in the last few years when I became an unemployed, struggling law student.

I graduated last year and, with my new-found financial stability, I’ve begun to work on my credit. Last week, I paid off the full balance my Discover and American Express cards, which carried about $3,500. This week, I paid $1,000 on my other cards – and I’m now out of credit card debt.

On Tuesday, I received an email from American Express stating that my card had been cancelled. When I called, the rep explained that it was due to my high debt-to-credit ratio, late payments, and a charge-off. While I understand the reasoning behind closing my account, I’m curious if there’s any way that I can reopen my account based on my current financial situation.

– KM

First, KM, congratulations for getting out of credit card debt!

American Express has some great cards, but frankly, their actions here leave me scratching my head. Why would they cancel your card after you paid off the balance? I can think of two possibilities…

1. American Express wanted to wait until you paid off your account before closing it, so they would have your money before upsetting you.
2. American Express was going to close your account anyway, and it’s just a coincidence this occurred a week after you paid off your debts.

Either way, you might want to call one more time and ask if they’d pull up your credit report again – and notice your debt-to-credit ratio is much smaller now that most of your cards have been paid off.

But more importantly, step back and take a look at the big picture. There are dozens of credit card issuers, and American Express is just one of them. If they don’t want your business, go out and find a company that does. For example, here are 5 cards with low interest rates and another 5 great cards with no annual fees.

We’re lucky to enjoy an extremely competitive market for credit cards, and many people receive too many credit card offers as a result. As the late payment and charge-off recede into your past, your credit score will improve, and I’m sure you will find credit card offers from American Express and others filling up your mailbox before too long.