Updated: May 01, 2023

Credit Card Closed Automatically Due to Data Breach? Here's What to Do

Recent bank data breaches have seen many credit cards closed without notice. Here are some steps you can take to make the transition to a new card easier.
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It seems like every day there's a new data breach making headlines and consumers are holding their breath to see whether their accounts have been hacked.

In an effort to try and minimize the damage, some banks are automatically canceling debit and credit cards at the first sign of suspicious activity.

The problem is that many customers aren't getting the message that their credit card is no good until after the fact.

Having a credit card closed is inconvenient, to say the least, especially if you use it primarily for everyday expenses or automatic bill payments.

Not only that, there's the potential for your credit score to suffer if the account shows up as "closed" on your credit report.

If you've been notified that your card has been canceled or you were one of the unlucky few who found out by having a transaction denied, there are a few things you can do to make the transition to a new card as smooth as possible.

Keep in mind that most banks will waive the debit card replacement fee if they believe your account is vulnerable to fraud.

Check your credit

Taking a close look at your credit report is the first thing you'll want to do after your credit card is closed. There are a couple of reasons for doing so.

First, you want to see how the canceled card is being reported.

Closing a card, particularly one that's been open for a while, can work against you because it shortens your credit history.

Credit scores are based in part on how long your accounts have been open, so if one of your oldest accounts suddenly disappears, you may see your score drop a few notches.

The other reason to check your credit following a suspected fraud breach is to look for any suspicious activity.

If you see inquiries for credit cards or loans that you don't recognize or purchases that you didn't make, you should let the credit card company know immediately.

The federal Fair Credit Billing Act limits your liability for unauthorized charges to $50, and you're not responsible for any fraudulent purchases if you report suspected theft of your information before the card is actually used.

Switch over automatic payments

Using a credit card for recurring payments like your utilities or mortgage is a good way to take some of the hassle out of paying the bills.

Instead of writing out a bunch of checks, you just pay the card in full at the end of the month.

If you've had your credit card closed, you'll need to set aside a chunk of time to update your information for all the accounts that have automatic payments.

When you're updating accounts with the reissued credit card information, try to limit who you share the number with.

Giving out your card number and expiration date over the phone, even if it's to a company that you trust and have a history of doing business with, puts your information at risk for misuse.

Updating your information online is not a foolproof way of keeping it safe since hackers are becoming increasingly savvy but it cuts out the middle man.

Make sure that as you're switching over payments, you're keeping a record of which accounts are connected with your card.

If a fraudulent charge does show up or you see an extra payment that you didn't authorize it may be easier to trace the source.

You should also be sure to get rid of the old credit card once the new one is sent out. Simply cutting the card in half and tossing it in the trash isn't good enough.

You need to make sure that the card number is completely destroyed so it can't be pieced back together. It's also a good idea to run a magnet along the card's data strip to deactivate it and cut up the data chip if it has one.

Consider changing passwords

For the most part, the kinds of data breaches that have gained attention have been associated with the theft of information through a point of sale transactions with Target, Michael's and Home Depot among the most high-profile cases.

Recently, however, Chase announced a security breach affecting approximately 76 million households and seven million small businesses that has been traced to a compromise of its account login system.

That means even if your bank has issued you a new credit card, your personal data may not be 100 percent secure.

Changing your user ID or passwords for your banking and credit card accounts may be a headache but doing so may help to protect your information from would-be thieves.

Minimizing your risk

There's no way to guarantee that your information won't be stolen at some point, so it's important that you're monitoring your accounts on a regular basis.

Don't hesitate to reach out to your card issuer if you see something that doesn't look right and be careful about where you use your card. Gas pumps, for example, are a popular place for thieves to place skimmers that collect your information when you swipe your card.

The other thing to look out for is scammers who may try to contact you by phone or email to get you to give up the goods. Some of these scams are obvious, but others are more sophisticated, even going so far as to set up a seemingly legit-looking website.

If they claim to be someone from your bank or from a business you have an account with, but you don't recognize the number or email address, make sure you verify the source before you share your account details.