Posted by Chuck on June 19, 2017
Credit Cards

Published on June 19th, 2017 | by Chuck

17

Is it Legal for the Bank to Shut Down your Credit Card without 30-Day Notice?

Some people asked us how US Bank could be shutting down Altitude cards and other cards without giving 30-day notice. According to California state law, the card issuer must give a 30-day notice before cancelling a credit card. (There might be other states that have this law as well.)

Unless requested by the cardholder, no card issuer shall cancel a credit card without having first given the cardholder 30 days’ written notice of its intention to do so unless the cardholder is or has been within the last 90 days in default of payment or otherwise in violation of any provision of the agreement between the card issuer and the cardholder governing the cardholder’s use of the credit card or unless the card issuer has evidence or reasonable belief that the cardholder is unable or unwilling to repay obligations incurred under the agreement or that an unauthorized use of the card may be made.

A reader asked that we get a reply on this from US Bank. They got back to us that they can close an account immediately if it violates the user agreement. Here’s the full statement issued by US Bank:

We value our cardmembers and are diligent when it comes to protecting their card benefits. Our cardmember agreement, which cardmembers agree to when they sign up for and use the card, outlines fraud and abuse triggers that result in automatic and immediate shut down of a cardmember’s account. Violation of the agreement and fraud are exceptions to the California statute’s 30 day notice requirement. 
I was pretty sure that this would be their reply, but people were asking about it and it’s always worth getting an official reply.
I followed up to clarify where it states such a thing in the cardmember agreement (doesn’t say it in the terms you agree to at time of application), and they got back explaining that it’s in the cardmember agreement sent along with the card (page 6):
 We reserve the right to adjust or reverse the number of Points that were awarded for unauthorized transactions. Further, this Account is intended to be used for the purchase of various products and services for personal, family, and household purposes, and we have the right to adjust or reverse the number of Points that were awarded or terminate the Account if we determine that purchases or transactions were outside of such use, including, without limitation, excessive or patterned purchases of cash equivalent instruments, such as gift cards, rewards cards, and other prepaid cards.



17 Responses to Is it Legal for the Bank to Shut Down your Credit Card without 30-Day Notice?

  1. Jon says:

    Attorney here, though not practicing in California. Just want to point out that private user agreements do not supercede State or Federal law. I just want to clarify that, when US Bank is saying “we can close the card if it violates the user agreement”, that they may be relying on some law that gives them this authority, not their own agreements.

    • Fish says:

      “or otherwise in violation of any provision of the agreement between the card issuer and the cardholder governing the cardholder’s use of the credit card”

      I think the law cited is the one that gives them the exception

  2. Jed says:

    I’ve posted my experience on this blog before. I live in Southern California. In late 2014 I got a letter from US Bank saying they’d decided to close all of my cards. No reason was given, but I’d been doing around $20k/month in kiva loans on my flexperks card to get the 3x on charity, plus loading my Amex for Target card (earning a 2x grocery store bonus). They didn’t actually say they would give me 30 days, but my cards stayed active for about a month after I got the letter, and I was able to redeem my points (around $4,000 worth).

    I do have friends in Cali who were shut down with no notice at all, so I don’t know why I got lucky. I applied for another card 14 months later and got denied. I called in and was told there are notes on my account saying not to give me any more cards based on activity on my previous accounts. Oh well.

  3. Rfclub says:

    Lawyer here?

    I just bought 1 vgc.
    How can it be “excessive or patterned”?

    • James B. says:

      US Bank has shutdown some Altitude customers after they purchased 1 x VGC. YMMV.

      • TJ says:

        Definitely YMMV because I bought around $1600 in VGCs in two days.

      • ws says:

        In other words, like Trump, US Bank is a law unto itself — never mind what anybody else thinks, cuz they have the power, the money, and they can do whatever the…. they say is “legal.” No?

        Off the rant, is similar language about gift cards buried somewhere in the fine print on my US Bank Club Carlson card?

    • James says:

      They do say ‘without limitation’, so maybe they think that 1 vgc is excessive

  4. Daniel says:

    It’s easy. The Supreme Court ruled in the late 70’s that credit card companies must follow the rules for the state that they’re incorporated in. That’s why you often see credit card companies sending your bill from South Dakota or Delaware.

    http://www.creditcards.com/credit-card-news/marquette-interest-rate-usury-laws-credit-cards-1282.php

  5. Jason says:

    So what can we do if they shut you down without notice? Chase did this to me.

    • F S says:

      First call Chase and ask that your accounts are reinstated, It happened to me earlier this month, and I got all my accounts back. I was shut down for couple days, during this time I did a lot of research and came across several Chase shut downs but in all cases accounts were reinstated.

      • Jason says:

        I already tried their executive office. Also filed CFPB. They closed all my credit cards and checking. None helped.

    • James B. says:

      Hi Jason,

      Can you provide DPs? What were you purchasing and how much as a heads-up for our readers here?

    • Chuck says:

      With Chase, you have 30 days to redeem your points.

    • Don says:

      Did you get shut down right after applying for a new card? If so, you might have fallen victim to one of their post-approval reviews, which have seen people get shut down. In these cases, people have some luck getting Chase to reopen the accounts. However, if you got shut down for some other reason, your chances of getting the accounts back are slim.

  6. Charles Chang says:

    I am wondering how much does usbank altitude points worth? 1.5c? Debating whether I should just cash all the points vs bearing the risk of having nothing.

    • James B. says:

      If you have purchased VGCs with your Alititude Card, I would cash out ASAP. If not, you should be in the safe zone and have no issues.

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