Risks and Consequences of Not Cancelling an American Credit Card

Americans often overlook the importance of properly closing their bank accounts, a practice that can lead to a series of financial risks and unintended consequences. While it may seem like a minor administrative task, neglecting to close an unused or unwanted bank account can expose individuals to fraud, unnecessary fees, and even damage to their credit scores.

One of the most significant risks associated with not closing a bank account is identity theft. In today’s digital age, personal information stored in bank accounts can be vulnerable to cybercriminals. According to a report by Javelin Strategy & Research, identity fraud reached a record high in 2024, affecting 42 million Americans. If a bank account remains active but unmonitored, thieves could potentially access it and use the funds or personal data for malicious purposes. For instance, in a recent case reported by CNBC, a man discovered unauthorized transactions on his old bank account that had been dormant for years. This incident highlights the necessity of ensuring all financial accounts are secure and closed when no longer needed.

Another consequence of failing to close a bank account is the accumulation of unexpected fees. Many banks impose maintenance charges or minimum balance requirements on inactive accounts. These fees can quickly add up, leading to a loss of funds without the account holder realizing it. A story published in The New York Times recounted how one woman was surprised to find several hundred dollars deducted from her old account due to these hidden charges. Such situations can be particularly problematic for those who have moved or changed their financial habits over time, as they might forget about these dormant accounts altogether.

Moreover, neglecting to close a bank account can impact an individual’s credit score. Banks often report account activity to credit bureaus, and if an account becomes delinquent due to unpaid fees or overdrafts, it could negatively affect one's credit rating. This, in turn, can make it more difficult for individuals to obtain loans, credit cards, or even rental agreements in the future. As explained by Experian, a major credit reporting agency, any unresolved financial issues tied to an account can linger on a credit report for years, creating long-term challenges for consumers.

In addition to financial implications, there are practical reasons why closing a bank account is important. For example, many people rely on direct deposit for their paychecks or government benefits. If such payments are mistakenly routed to an inactive account, it can cause delays in receiving funds. Similarly, automatic bill payments linked to an old account could result in missed payments, late fees, or service interruptions. These scenarios underscore the importance of keeping track of where money is being sent and received.

To mitigate these risks, experts recommend regularly reviewing all financial accounts and promptly closing those that are no longer in use. Setting up alerts for unusual activity can also help detect potential fraud early on. Furthermore, individuals should ensure that all outstanding checks have cleared and that any pending transactions are completed before closing an account. By taking these proactive steps, Americans can protect themselves from the pitfalls of neglecting their bank accounts.

In conclusion, while the process of closing a bank account may seem tedious, it is a crucial step in maintaining financial health. From preventing identity theft to avoiding unnecessary fees and preserving credit scores, the benefits far outweigh the effort involved. As illustrated by recent news reports, the consequences of ignoring this responsibility can be both costly and inconvenient. Therefore, it is essential for everyone to prioritize the timely closure of unused bank accounts as part of their overall financial management strategy.