Banking and Finance

The Consequences of Freezing a Credit Card

July 27, 2021

Research published by American Express shows at least one in five Americans has frozen their credit due to financial issues or concerns. However, others remain confused about how to freeze a credit card specifically, why you would want to in the first place, and how to go about doing it.

Freezing a credit card usually happens after a fraud attack or after you’ve lost a card. When you freeze it, you’re preventing any new charges from being authorized, which is good, obviously. But, you might have other questions. Does this hurt your credit score? Can it affect your chances of taking out another credit card with the same company?

What Happens When You Freeze a Credit Card?

The most common reason to freeze a credit card is due to a lost or stolen card. If you’ve lost your cards or have had them stolen out of your purse or wallet, it’s a good idea to contact your credit card company and ask them to freeze your card. 

What does that mean? It means they’ll put a hold on all of your cards so that nobody can make new purchases. Usually, it’s a quicker and easier way to ensure that nobody can use your card as opposed to reporting it lost or stolen. However, that depends on the credit card company and their policy regarding lost and stolen cards.

When you freeze your account, you’re simply telling the card issuer to avoid authorizing any new transactions. However, this doesn’t prevent other transactions from occurring, such as recurring bills you’ve set up on the account, returns, credits, disputes, monthly fees, interest, and related fees.

Freezing An Account vs. Deactivating a Card

Oftentimes, you might encounter sections on a credit card company’s website that talk about freezing an account linked to a credit card or perhaps they give you the option to deactivate the card. It’s important to note that these are two different things.

When you freeze an account, all cards on that account will be frozen and your account cannot be used for cash advances, balance transfers, or new purchases anywhere online, in-store, or otherwise. Deactivating a card deactivates that one card and prevents you from purchasing items in-store at a POS terminal. Your account in general can still be used for online purchases.

Depending on the situation you find yourself in, it might make more sense to simply deactivate a card. If, for example, you’ve got an authorized user on your account that’s a child of yours, you can deactivate their individual card if you find that they’re overspending or spending irresponsibly. If you’d like to prevent yourself from spending or need to prevent fraud, you can go ahead and freeze the whole account temporarily.

In neither case will this action cause harm to your account or your credit score. 

How to Freeze a Credit Card

How do you freeze a credit card? It depends on the credit card company your account is with.

If you have a Discover card, for example, you can freeze a credit card via their mobile banking app or over the phone by calling their customer service number. The same goes for Wells Fargo as they give you the option to turn your card on and off easily via their mobile app or by calling the Wells Fargo customer service number.

More often than not, it’s going to be faster and easier to freeze your card online or through your bank’s mobile app. The freeze goes into effect immediately and there are no further actions you need to take until you’re ready to turn the card back on. And, once you’re ready to do so, you’ll be able to turn it on immediately and without penalty.

This is actually a great option if you find it difficult to curb your spending. If you have the option, always do this instead of closing out the credit card and account completely. Closing a line of credit can hurt your credit score as it affects your credit utilization rate and reduces your score in terms of the total credit amount you have open.

Stay On Top of Your Finances

Staying on top of your finances and spending is a great way to ensure that you never have to freeze a credit account. There’s no real harm in doing so, especially if it’s due to something such as a stolen or misplaced card. However, if you’re freezing a credit card to avoid overspending then you’ll eventually want to get to the root of the issue.

Saving money to spend instead of charging expenses to your credit card is a good way to avoid overspending. Look into something like a Cheese Debit Card that will allow you to enjoy zero fees when spending and also get cashback and saving bonus.

It’s one of the easiest ways to save a lot, or at least a little, to help you either pay off credit card debt or add to your savings. It requires that you do literally, absolutely nothing aside from sign up. Interested in learning more? Sign up today.

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