Having your credit card account in good standing generally means that you’re abiding by the terms of your credit card agreement. While what counts as “good standing” may vary by credit card issuer, it usually means you’re making at least the minimum payment by the due date each month. Some credit card issuers may also define good standing to include keeping your account active and staying below your credit limit. Other accounts with the same bank, even a checking account or loan account, can impact your credit card standing. So it’s important to maintain a good standing with all your accounts.
What Happens If You Lose Good Standing
Keeping your in good standing allows you to enjoy the privileges and benefits of your credit card account, e.g. making purchases up to your credit limit, redeeming credit card rewards, etc. However, once you lose your good standing, and it can happen sometimes with just a single late payment, you’ll suffer some consequences.
- Fees are added to your bill. For example, if you are as little as one day late on your credit card payment or your payment is less than the minimum.
- Your credit limit is lowered as a result of late payments or even high balances on other credit cards. (Having your credit limit lowered doesn’t always mean your account is not in good standing. Sometimes credit card issuers lower credit limits for business reasons.)
- Your interest rate increases after you’ve been 60 days delinquent on your credit card payments. Beware, once the penalty rate is triggered, it may apply indefinitely for new purchases made on your account.
- Your rewards are forfeited after missing a certain number of payments, which varies by the credit card issuer. Some rewards programs may restore your rewards after you’ve fixed your account. Others forfeit those previously earned rewards indefinitely.
- Charging privileges may be suspended for a period of time until you bring your credit card back into good standing.
- Your account may be closed if you’re continually late on payments, you’ve become severely delinquent on payments, or you let your credit card remain dormant for several months. Once your account is closed, you’ll typically have to apply for a new one. Even after your account is closed, your regular monthly payments are still due.
What To Do
If you’re having problems with your account, e.g. your credit card purchases are unexpectedly declined or your rewards are unavailable, or you see an unexplained fee or interest rate increase, contact your credit card issuer to find out what happened. Correcting the negative action may restore your account privileges if your account hasn’t become too delinquent.
It’s not just your relationship with a particular credit card issuer that’s at stake if you lose your good credit card standing. Certain actions put your entire credit profile at risk. Specifically, if you’re more than 30 days late on your credit card payment, a negative entry is made on your credit report. As a result, your credit score may drop. Serious delinquency like becoming 90 days past due or a charge-off could cause other credit card issuers to reconsider their financial relationship with you.
Keeping your credit card in good standing is important to maintaining a good credit score. The history of your account still plays a factor even when your current standing is positive. For example, if you were behind on your payments, the late notice stays with your account and on your credit report (for seven years from the date of the delinquency) even after you get caught up on your payments. Credit card issuers may decline credit limit increase or interest rate decrease requests based on your past account mistakes.