Yes. If you enroll with National Debt Relief, your enrolled credit cards will be closed, and cards you leave off the program can still be closed, have their limits cut, or have their rates raised once your issuers see what is happening on your credit report. Some of the closing is required by the program itself; the rest is done by your card issuers under the terms of the cardholder agreement you signed.
Why Enrolled Cards Get Closed
When you place a credit card into a debt settlement program, you agree to stop using it. The program needs the balance frozen so it can negotiate a lump-sum payoff for less than you owe. If new purchases kept hitting the card, the balance would move, and the settlement company could not propose a fixed number to your creditor. Cutting up the card or removing it from digital wallets is a standard enrollment step.
Your card issuer will then close the account on its own. Nearly every cardholder agreement lets the issuer suspend or terminate the account at any time, for any reason, including missed payments or a change in your finances. Federal law does not stop a card company from closing an account in these circumstances. For standard credit cards, the issuer’s authority to close comes straight from the contract you signed when the account was opened.1eCFR. 12 CFR Part 226 – Truth in Lending (Regulation Z)
What Happens to Cards You Do Not Enroll
Many people hope to keep one card out of the program for emergencies. In practice, that rarely holds for long. Card issuers watch your overall credit profile, and once they see missed payments or settlements on other accounts, they often act on cards you did not enroll, even ones with a zero balance. Common responses are lowering your credit limit, raising your interest rate, or closing the account.
When a creditor takes one of these steps based on your credit report rather than your history with that specific lender, it counts as an “adverse action.” Under the Fair Credit Reporting Act, the creditor has to notify you, tell you which credit bureau supplied the report, and let you know you can request a free copy of that report within 60 days.2Federal Trade Commission. Using Consumer Reports for Credit Decisions: What to Know About Adverse Action and Risk-Based Pricing Notices There is a limit to this protection: if you are already delinquent on a particular account, a refusal to extend more credit on that same account is not treated as adverse action under the Equal Credit Opportunity Act.3Office of the Law Revision Counsel. 15 USC 1691 – Scope of Prohibition
The Timeline From Stop-Paying to Formal Closure
A card does not go from active to closed overnight. The change unfolds over several months once you stop making direct payments to the creditor:
- Within days, the card becomes unusable for purchases and online transactions, either because you have stopped using it or because the issuer blocks new charges after detecting a missed payment.
- Between 30 and 90 days, the creditor reports the account as past due, moving through 30-day, 60-day, and 90-day delinquency marks with each missed billing cycle.
- Between 120 and 180 days, the creditor typically charges off the account. The account is reported as closed, and the debt may be sold or assigned to a collection agency, or the settlement company may begin negotiating a payoff.
The charge-off and the delinquency marks that led up to it stay on your credit report for seven years from the date the account first became delinquent.4Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports
Side Effects to Handle Before the Cards Close
Recurring Charges
Check every card you plan to enroll for recurring charges attached to it, including subscriptions, utilities, insurance premiums, and streaming services. Once the card is frozen or closed, those payments will decline. That can mean service interruptions, late fees from the biller, or a lapse in something you cannot afford to lose, like car insurance.
The Consumer Financial Protection Bureau recommends a three-step approach: contact the company collecting the payment and revoke your authorization in writing, notify your bank or card issuer and ask them to block future charges from that company, then watch your account for several billing cycles to confirm the charges have stopped.5Consumer Financial Protection Bureau. How Do I Stop Automatic Payments From My Bank Account Move each recurring payment to whatever method you plan to use going forward before the card gets frozen.
Authorized Users
If someone else is listed as an authorized user on a card you enroll, the missed payments and eventual closure can show up on their credit report as well. Credit bureaus generally report account activity to authorized users, so the delinquency marks that pile up during the settlement process may pull down their scores. The authorized user can call the card issuer and ask to be removed. Once they are removed, the account and its history should stop appearing on their credit report.
Unused Rewards
Any unredeemed cash back, airline miles, or hotel points are usually forfeited when an account is closed, because most rewards programs require the account to be open and in good standing before you can use the balance. The Consumer Financial Protection Bureau has flagged the practice of revoking previously earned rewards when closure is outside the consumer’s control as a potentially unfair practice, but that guidance primarily targets issuers who close accounts unilaterally for business reasons, not situations involving missed payments.6Consumer Financial Protection Bureau. Consumer Financial Protection Circular 2024-07 – Credit Card Rewards Programs Redeem what you can before you enroll.
What the Closures Do to Your Credit Score
The closures themselves are not the main problem. The damage comes from what surrounds them, and it stacks:
- Each 30-day, 60-day, and 90-day late mark reported during the settlement process is a separate negative entry. Payment history is the single most influential factor in credit scoring.
- When a card is closed, its credit limit disappears from your profile. If you carry balances on other cards, your utilization ratio jumps, which pushes your score down further.
- Once a debt is settled for less than the full balance, the account is reported as “settled” rather than “paid in full,” which tells future lenders the original obligation was not fully met.
One narrow piece of good news on the closure itself: the FICO scoring model does not treat the “closed by grantor” notation as a separate negative mark. Whether you closed the card or the issuer did, the closure status alone is neutral. The score damage comes from the delinquency history and the change in your utilization.7FICO. Score a Better Future Increases FICO Score Understanding The negative entries from the settlement process can stay on your credit report for up to seven years from the date of the original delinquency.4Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports
Getting Cards Back After the Program
Your credit will not recover the moment your last debt is settled, but the path is straightforward. The usual first step is a secured credit card, which requires a refundable deposit that becomes your credit limit. Keeping the balance low and paying on time each month builds a fresh record. Some issuers will upgrade you from a secured card to a standard unsecured card after several months of on-time payments.
Over time, the weight of the negative marks fades. Scoring models put more emphasis on recent behavior than on older entries, so consistent on-time payments gradually outweigh the delinquencies from your settlement period. The settled accounts drop off your credit report entirely seven years after the date of the original delinquency. Until then, avoid taking on debt you cannot comfortably repay, and check your credit reports regularly to confirm the settled accounts are being reported accurately.