Many consumers mistakenly believe that once a credit card is closed, they’re no longer responsible for the remaining debt. However, this is not the case.
Regardless of why your account was closed, you’ll need to pay any balance you owe. Understanding the proper steps to pay off a closed credit card account is crucial for maintaining your financial health and credit score.
Here’s our guide to how to pay a closed credit card account.
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What is a closed credit card account?
A closed credit card account is an account that can no longer be used to make purchases. Accounts can be closed for a number of reasons:
- There hasn’t been any activity on the card for a certain period of time.
- You have asked the creditor to close the account.
- You continue to make purchases without making payments.
- Your credit score drops significantly.
- You stop making payments for an extended period of time (usually 180 days or more).
However, having your account closed doesn’t mean you don’t have to pay back the balance you owe.
Can you still make payments on a closed credit card?
Yes, you can – and if you have an outstanding balance you absolutely should.
You’re required to pay off the balance on a closed credit card just like you are with an open account. If you don’t make the payments (or make them late), the account may be marked as delinquent.
Late payments over 30 days are typically reported to credit bureaus and can lower your credit score. They can also remain on your report for seven years.
5 steps to pay a closed credit card account
Paying a closed account doesn’t have to be complicated. Let’s break down how to pay a closed credit card account so it’s clear.
1. Review the outstanding balance and any accrued interest
There are a few different ways you can do this. If you have an online account with your credit card issuer, you should be able to check your balance via an online portal. Your outstanding balance should also be on your last credit card statement. If you don’t have access to your last statement or an online account, you can call your card issuer for more information.
2. Determine the available payment options
There are also a few ways you can pay the remaining balance:
- Online: If you have an online customer portal, you can make a payment there.
- By mail: If you receive statements in the mail, you can usually send in your payment by mail – just be wary of checks or cash getting lost in the mail.
- By phone: You can call the credit card company and pay that way.
An easy way to pay off your balance is to set up an automatic payment from your bank account. That way, you don’t run the risk of forgetting to make a payment.
3. Consider negotiating a settlement or payment plan
If you owe a significant amount, it might be worth discussing a debt settlement plan with your issuer. By doing so, you may be able to pay a reduced amount in full. Alternatively, if the required monthly payments are too high, you might consider negotiating a payment plan.
4. Make the payment
Once you’ve chosen a payment method, make sure to follow through! Timely payments are essential if you want to preserve your credit score. Try to cut out unnecessary expenses or even take on extra work to make sure you don’t fall behind.
5. Confirm the payment
Keep a copy of your payment receipts. That way, if there’s an issue with the account, you can prove to the creditor that you’ve paid the required amount on time. It’s also a good idea to check your credit card statement to make sure the payment went through.
Tips to manage the payment process effectively
Sticking to a repayment or debt management plan can be a challenge, especially when money is tight. Here are some helpful tips.
1. Create a monthly budget
Take a moment to look at your monthly income and expenses and decide how much you can realistically afford to repay each month.
2. Prioritize credit card payments
Don’t let your payments fall by the wayside. Make a point of paying on time each month, even if it means cutting monetary corners elsewhere.
3. Avoid unnecessary expenses
Budgeting can help pay your debt. Give yourself a limit for each spending category. For example, if you’ve allotted $1,000 per month for groceries, hold yourself to that limit. Making meals at home whenever possible, always having a list when you go shopping, and avoiding impulse buys are all good ideas.
Don’t Forget to Pay Off Your Closed Accounts
Paying off credit card debt — including debt from closed accounts — is one of the fastest ways to improve your credit score. If you aren’t sure if you have any closed accounts on your report, a credit-tracking app can help.
FAQ
Is there a time limit on paying off a closed credit card?
That depends on your agreement with the creditor. You need to make at least the minimum payment every month until the card is paid off. If you don’t, the account can be marked as delinquent, and that may hurt your score.
Can I transfer the balance from a closed credit card to a new one?
Yes, you can. If the new card has a lower interest rate, you may save more over time.
Can I reopen a closed credit card if I pay the balance in full?
That depends. If the account was closed because you stopped making payments, most issuers won’t be willing to reopen it. If you do want to reopen the account, it’s worth asking the credit card issuer.
