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About 62 Million Cardholders Had Card Limits Cut, Card Accounts Closed Involuntarily During the First 4 Months of 2021

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Nearly one in three credit cardholders had their card’s credit limit slashed — or even had the card account closed altogether — during the first four months of 2021, according to a new survey from LendingTree.

This continues a trend that we’ve seen since the early days of the pandemic: Credit card issuers targeting dormant or little-used credit cards for limit decreases or closure in order to reduce the financial institution’s risk during a time of high unemployment and overall economic uncertainty.

The trend is slowing as the pandemic’s impact wanes in the face of widespread vaccinations. In addition, credit card debt as a whole has shrunk in the past year as cardholders have taken advantage of reduced spending, government economic impact payments and deferments on other debt (such as mortgages and student loans) to focus on paying down high-interest credit card debt. That means that some of these closures and credit limit reductions might not have been as hurtful to many Americans as we might have expected them to be a year ago.

Still, account closures and credit limit decreases are still widespread, and millions of Americans are still struggling in the wake of one of the biggest economic crises in our nation’s history. These cardholders now find themselves with a smaller financial safety net and may have to look to higher-interest debt options to get by.

The best news for consumers, however, is that you don’t have to accept the card issuer’s decision as final. Success is far from guaranteed, but if you take the time to ask, they might just change their minds.

Key findings

  • Credit card issuers continue to slash limits or close cards. Nearly 1 in 3 credit cardholders say their issuer slashed their limit and/or closed one of their cards in the first five months of 2021. Millennials and Gen Zers were hit hardest.
  • Fewer cardholders are victims of involuntary cuts and closures than at the onset of the pandemic. From late March to mid-July 2020, more than 1.1 million cardholders per day were impacted, while from January to mid-April 2021, about 558,500 per day were impacted.
  • Limit cuts are more common than card closures. About 30% of cardholders say their issuer slashed their limit at some point since the beginning of 2021, while 21% have had a credit card closed during the same time frame.
  • Lack of activity is the main driver behind involuntary card closures and limit cuts, followed by a credit score drop. Recent late payments was another common factor.
  • More than 1 in 5 cardholders don’t know that a closed credit card can hurt their credit score.
  • Consumers are changing their habits to avoid card closures or limit cuts. 30% say they started using a little-used card during the pandemic for this reason, and a further 22% had already developed this habit before the pandemic.

Closures and reductions have slowed, but still common

When the pandemic took hold, it hit the economy like a thunderbolt. As unemployment skyrocketed to unprecedented levels seemingly overnight, financial institutions were shaken. The spike in joblessness and the speed with which it happened meant that lenders simply didn’t know who was safe to lend to and who wasn’t, so many financial institutions largely shut down lending for a while as they figured out their next steps.

They didn’t just stop making new loans, but also tried to minimize risk by slashing some cardholders’ credit limits and closing other users’ accounts altogether. The focus was primarily on dormant or little-used cards. The thought: If you weren’t using this card in good economic times, we’re not sure we want you to use it when times get tough.

Hence, the great pandemic purge of credit cards.

In the very early days of the pandemic in March and April 2020, about 1.7 million cardholders per day were having their cards closed or their limits slashed involuntarily. From May to July 2020, about 1.1 million cardholders per day were affected.

Our latest survey showed that from January to April 2021, about 558,000 cardholders had this happen to them each day.

As with those previous surveys, younger male cardholders were more likely than others to have been impacted.

Slashed limits more common than closures, but dollar amounts were similar

Cardholders were more likely to say they had a credit limit slashed on one or more of their credit cards than a card account closed altogether (29% vs. 21%) respectively.

More than half of the credit limit reductions (54%) were more than $1,000, including 30% that were reduced by $5,000 or more.

The credit limits on the closed accounts were similar, with 59% saying their closed card had a limit of $1,000 or more and 31% saying it was $5,000 or more.

Why this matters

When your access to credit is reduced substantially, it can really hurt.

Most important, it can limit your options when times get tough financially. Whether we like it or not, millions of Americans rely on credit cards as a de facto emergency fund. When that cushion is reduced by thousands of dollars, it can lead financially strapped consumers to look at unsavory options such as payday loans, which have far higher interest rates than those found on credit cards.

These moves can also do real damage to your credit score — and about 1 in 5 cardholders (22%) didn’t know that was true.

The biggest impact is an increase in your credit utilization rate — how much debt you have compared to your available credit. If your available credit is reduced significantly while your balances remain unchanged, your utilization rate will climb.

Say you owe $1,000 and have $5,000 of available credit. Your utilization is a reasonable 20%.

However, shrink that available credit to $2,500 and your utilization spikes to 40%. That increase will likely have a negative impact on your credit score, even though your balance hasn’t grown a penny. That’s because utilization is the second-biggest factor in credit scoring behind your payment history.

A closed card also impacts your credit profile by shortening your credit history. That’s especially true if the closed card is your oldest card, which nearly two-thirds of those impacted said their closed card was.

The length of your credit history is a factor in credit scoring, but the good news is that it might not matter as much as you think. That’s because a closed credit card account with a positive history stays on your credit report for 10 years (one with a negative history stays on for 7 years).

That means that even if your oldest card is closed today, it will still contribute to your length of credit history for another decade. By the time that old card ages off of your credit report, any other cards could have added 10 more years to their history, thus minimizing the impact of that closed card.

How to protect your card from being closed

Unfortunately, there’s no foolproof way to keep an issuer from closing your card, but there is a simple way to improve your odds: Use the card more.

If you don’t use a card, an issuer doesn’t make money off of it. If an issuer isn’t making money off a card, they have little to lose by closing it, aside from potentially upsetting a customer. That’s why using a card more is the best way to avoid having it closed or having your limits reduced.

About 3 in 10 cardholders said they started using a dormant card more during the pandemic for this reason, and that’s good news.

Here are a few tips to make sure you’re using it wisely:

  • Shift recurring expenses, don’t create new ones. Consider moving a recurring expense, such as a streaming subscription, from your primary card to a dormant card. That keeps that little-used card active without running up your costs.
  • Think small. You don’t need to put hundreds of dollars of purchases on a card to keep it active. A few small purchases will do just fine and won’t break your budget.
  • Keep perspective. If you’re struggling financially, feel overwhelmed by all that’s facing you and can’t bear the idea of adding another task to your to-do list, don’t worry about that dormant card. Difficult times require difficult choices and prioritization, and while your credit is an important thing, there are definitely things that are more important, especially if you’re battling to keep the lights on and put food on the table.

It’s also important to understand that banks don’t just close dormant accounts and slash credit limits during bad economic times. It can happen even in the best of times, so keeping those cards in use is a good idea anytime, as long you do it wisely.

The decision may not be final: How to ask the issuer to reconsider

I am one of the 62 million Americans who have been impacted by this in 2021. My second-oldest card was closed involuntarily earlier this year.

It’s a card I hardly ever use, so when I was told of its closure, I wasn’t surprised. But I didn’t want to just let it happen. So I called the issuer and asked them to reconsider and — surprise! — they reversed their decision.

Here’s what I learned:

  • You have to ask. There’s no guarantee that you’ll be successful, but they definitely won’t change their mind unless you request it. Make the call.
  • Look for specific contact info in the notification you received. I found out in an email that my card had been closed. That card contained a phone number — different from the one on the back of my card — to call and ask questions about the closure. That was where I started.
  • Be polite. Sure, you might be angry about the closure, but taking it out on the customer service representative isn’t going to get you anywhere. Be nice. Yes, be direct and clear. But be kind, too.
  • Update income level and other relevant information, if necessary. Has your income increased since you last provided that information to the issuer? If the card is several years old, it might have. If so, let the issuer know. It gives the issuer a new data point to consider in making their decision. And remember, in many cases, it is OK to include your spouse’s income in the amount you tell the issuer. That could make a difference.
  • Know it may take some time to get an answer. I learned of their decision 7 to 10 business days after my request. You shouldn’t expect to get an answer on the same day, but it shouldn’t take a month either.
  • Make sure you get a reopened account, not a new one. Remember, you’re not asking for a new card. You’re asking for your old one to be reopened. When making the request, make sure to confirm that your history on this card will appear unbroken on your credit report.
  • If all else fails, look at other options. You may not get your way. If you don’t, consider opening a new card to make up for the lost available credit. You can also consider asking for a higher credit limit on one of your other cards. That can help minimize the hit to your credit caused by the card closure.



LendingTree commissioned Qualtrics to conduct an online survey of 1,013 credit cardholders from April 14 to April 21, 2021. The survey was administered using a non-probability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.

We defined generations as the following ages in 2021:

  • Gen Zers: 18 to 24
  • Millennials: 25 to 40
  • Gen Xers: 41 to 55
  • Baby boomers: 56 to 75

While the survey also included consumers from the silent generation (defined as those age 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.