by Joseph Kenny | 05/7/09

It is an obvious point, but one worth repeating that the one of the largest factors contributing to the financial crisis in the U.S. is the borrowing (and spending) habits of the American consumer. More money has been taken out than can be repaid.

As a response, many of these same consumers have made serious efforts to reform their habits and create more financial responsible lifestyles. In reaction to these changes, many credit card companies have responded by threatening to close down the accounts of those who do not make enough charges on their cards.

Major card issuers like Bank of America, Chase, Citibank, and American Express have been scaling back their credit lines and closing out the accounts of those customers who fail to make regular expenditure with their credit cards.

Adding to insult to injury, the card issuers are not required to notify you in advance about the possibility of account closure. These card companies are simply required to notify of the customer in writing about the action.

Of course, the only way to halt the cancellation of your credit card account if the issuer does deem to give you an advanced warming is immediately to start spending with the card again.

As many industry insiders have pointed out, cutting off those customers may be a good financial step in the present economic situation, at least from a business perspective.

By cancelling those accounts that see little to no activity, the company hopes to reduce their overall risk profile so that potential liabilities are outweighed by available assets. Additionally, inactive accounts still cost the card issuer a regular fee to keep open, while not providing the benefit of income in the form of merchant fees and interest.

Nonetheless, the consumers who have their accounts closed may suffer a serious blow to their credit score.