Credit Card Guide

What Is A Closed Account Fee?

10 February 2013 by CreditCardsCo™

A closed account fee is a fee that credit card issuers typically charge a customer when they close their account within a specified time limit after opening the account. Both the amount of the charge and specified time limit can vary between credit companies but the applicable fee will be explained in the terms and conditions.

Credit cards often carry many fees and one of those is the closed account fee. This is a fee that credit card issuers could potentially charge a customer who closes their account within a certain amount of time after opening the account. Each card company is different and thus their charges and grace periods will also vary.

It is very common for credit card companies to charge fees for behavior that they wish to discourage. This is where the closed account fee comes into play; it is a service charge that is designed to prevent new account holders from closing their account early.

There are many fees that credit card companies assess to accounts in order to stay in business. You can avoid some of these charges if you know what to look for. While you may be aware of things like late payment charges, returned check fees, and even application fees or annual fees, there is another one that you should be aware of: the closed account fee.

What Is A Closed Account Fee

A closed account fee is a fee that is only applicable within a short period of time after you open your account. This is a measure that credit card companies take to ensure that they make a profit for each customer they have, even those who rarely use their card or those who only want a limited amount of credit. This is a perfectly legal and acceptable business practice since they try to provide the same quality of service to everyone.

Not every company assesses a closed account fee, and those that do will make a determination based on several different factors. In general, though, you should know that every company is different, and just as each company determines finance charges differently, so do they determine each of the various fees differently.

Closed account fees are typically:

  • Between $5 and $45
  • Attributed to accounts closed within 60 to 90 days.

Again, these numbers can vary.


If a credit card company chooses to charge a closed account fee, they need to disclose it with the terms and conditions of the account, along with all of the other fees they might charge. Again, every company is different so it is important to always read the fine print before you sign the contract. There you will find all fees, penalties, and charges that could be applied to your account as well as an explanation of what they are and how they are assessed.

Buyer Beware

Unfortunately, there have been cases that credit card companies might advertise a low rate in order to attract you as a customer but then offer you a different rate. While you might think this is a bait and switch you have to remember that credit card companies use several different factors to determine what your rate should be. Dissatisfied customers might then try to close their account without using it, which is largely why the "closed account fee" exists.

Before you apply for any credit card, be sure that you understand the terms and conditions. Credit cards are not like merchandise: you can't simply return them for a refund. If you are unhappy with your card, you may still end up paying the closed account fee as a penalty.

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