Recently, we are seeing a great number of people having all their accounts shut down by Chase. Many people recently reached out to us for assistance on this matter.
Why do Chase shutdowns happen?
Chase is trying to fight what is called bust out fraud. Fraudulent people were building credit by paying their bills on time and keeping their utilization low. Slowly, they were able to build up trust by banks and get approved for high credit card limits. Then they ran up high balances and disappeared.
Experian white papers pointed out the following activities to be considered indicators of a bust out scam:
- Frequent convenience checks
- Frequent cash advances
- Multiple payments made within one billing period from different accounts and different sources
- Purchases from high risk, high-value merchants
- Unusual purchase amounts ($1000 at the dry cleaners)
- Credit line increases
- A lot of new accounts
- Unusual balance growth
It is believed that Chase is following very similar guidelines to detect bust-out fraud. It seems that Chase is also closing down accounts for the following reasons:
- Paying Chase credit card bills with third party checks (even checks that are written out to Chase but coming from a third party bank account)
- Paying Chase credit card bills with cash
- Gaming with reward points, like selling points, etc.
- Lowering your credit limit to avoid paying the annual fee on the Chase Sapphire Reserve, and, Ritz Carlton credit card
Avoiding a Chase shut-down
Obviously, the way to avoid a Chase shut down is by avoiding any of the activities expressed above. Convenience checks, cash advances, multiple payments within the same billing cycles coming from different accounts, third party checks, cash payments, high risk or high-value purchases, unusual purchasing patterns, should all be avoided while using any of your Chase credit card accounts (if one goes then so will all).
What happened frequently, when a person was shut down by Chase, the authorized users on their accounts had their own accounts shut down too. So another way to avoid a Chase shutdown is not to be an AU on any other Chase account without checking into it first! (Bad friends were never good for anything!)
Also, make sure not to apply for a Chase account or ask for a credit line increase if your credit report is showing many recent credit inquiries, a lot of new credit, or high credit utilization. This may cause your existing credit cards to get shut down too.
Reviews may also be triggered randomly, even if you don’t apply for a credit card. Chase always has the right to make a soft credit pull on any customer’s credit report. (When I recently reviewed my Experian credit report I found 3 soft credit inquiries done by Chase).
What can be done after I was shut down by Chase?
Chase claims they have the right to close any customer’s accounts at any time for any reason. They usually do not give much of a reason to the consumer as to why they were shut down.
Some people are reporting that they have managed to have their accounts reinstated after reaching out to Chase to be reconsidered.
If you feel you were unfairly shut down by Chase, I recommend you call Chase corporate to have it investigated and reconsidered. You can ask your local banker or branch manager to help you get connected to the corporate office.
If you feel your accounts were shut down due to discrimination you can file a complaint against Chase with the Consumer Protection Financial Bureau. Chase will need to respond to your complaint.
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Chase shutdowns are not for life
Once you’re shut down by Chase it can take years for you to get back in. But shutdowns are not for life. At the same rate that I hear people getting shut down I also hear people getting back in. The average is about 7 years but I have seen some going quicker as well (and some longer). If you’re shut down, I recommend you try to apply for a Chase credit card once a year and see if you get approved or not. If you do get declined, don’t try again every day, wait till next year and hopefully one day you will get the good news and your account will be approved.
The recent Chase shutdowns target many people for many reasons. You can try to have shutdowns avoided by being a really perfect consumer without any ‘shtick’. If you run a life or a business that requires you to behave in a bit more of a complicated manner than what was outlined above, then rather don’t bother with Chase.
At Help Me Build Credit we can help you choose the perfect new credit card. Just go to our Ultimate Credit Card Finder and choose one from there.