why does synchrony bank close accounts

Daniel Parker

2 min read

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24-02-2025

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Why Does Synchrony Bank Close Accounts? Understanding Account Closure Reasons

Synchrony Bank, a major provider of store credit cards and personal loans, occasionally closes customer accounts. While frustrating, account closures aren't arbitrary. Understanding the reasons behind these closures can help you avoid them. This article explores the common reasons why Synchrony Bank might close an account.

Common Reasons for Synchrony Bank Account Closure:

Several factors can lead Synchrony Bank to close a customer's account. These reasons often relate to risk management and compliance with banking regulations. Let's examine some of the most frequent causes:

1. High Risk Behavior:

• Repeated Late Payments: Consistent late payments are a major red flag. Synchrony Bank, like any financial institution, assesses risk. Repeated late payments signal higher risk of default, prompting account closure.
• High Credit Utilization: Maintaining a high balance relative to your credit limit (high credit utilization) suggests financial strain. This increases your risk profile and may result in account closure. Aim to keep your utilization below 30%.
• Multiple Hard Inquiries: Numerous credit applications in a short period indicate potential financial instability. Synchrony Bank may view this as a high-risk factor.
• Suspected Fraudulent Activity: Any suspicious activity, like unauthorized transactions or attempts at identity theft, will likely result in immediate account closure. Synchrony Bank takes fraud seriously.
• Account Dormancy: If an account remains inactive (no activity) for an extended period, Synchrony Bank might close it. This is common across many financial institutions.

2. Violation of Terms and Conditions:

• Breach of Contract: Failing to adhere to the terms and conditions outlined in your credit agreement can lead to account closure. This includes actions like exceeding your credit limit or engaging in prohibited activities.
• Failure to Provide Required Information: Synchrony Bank may require updates or verification of information periodically. Failure to provide this information could lead to account closure.

3. Internal Bank Policies and Risk Assessments:

• Changes in Risk Appetite: Synchrony Bank periodically reviews its risk assessment models. This can lead to the closure of accounts deemed higher risk, even if the customer hasn't violated any specific terms.
• Compliance with Regulations: Synchrony Bank must comply with various federal and state regulations. Account closures may occur to maintain compliance with these regulations.

What to Do If Your Synchrony Bank Account is Closed:

If your account is closed, contact Synchrony Bank immediately to understand the reasons. Review your account history and credit report to identify any potential issues. Dispute any inaccurate information. Remember, maintaining a healthy credit profile is crucial to prevent future account closures.

Preventing Account Closure:

• Pay on Time: Consistent on-time payments demonstrate financial responsibility.
• Keep Credit Utilization Low: Aim for a credit utilization ratio below 30%.
• Monitor Your Account Regularly: Stay informed about your account activity and report any suspicious transactions immediately.
• Understand Your Credit Agreement: Familiarize yourself with the terms and conditions of your Synchrony Bank account.
• Maintain a Good Credit Score: A high credit score reflects financial stability and reduces risk.

Conclusion:

While Synchrony Bank account closures can be upsetting, they are usually a result of risk management practices and compliance requirements. By understanding these reasons and maintaining responsible financial behavior, you can significantly reduce the chances of your account being closed. Remember to promptly address any issues or inquiries with Synchrony Bank to maintain a positive relationship.