Small Business Series: What Happens to a Business Credit Card if a Bank Fails
If your bank fails, the fate of your business credit card will depend on several factors, including the type of credit card you have, whether the card is secured or unsecured, and the terms of your card agreement. Here are a few possible scenarios:
The card issuer is acquired by another bank: In some cases, if your bank fails, the credit card issuer may be acquired by another bank. If this happens, your credit card account may be transferred to the acquiring bank, and you may be able to continue using your card as usual. However, the terms and conditions of your card agreement may change, so it's important to review any notices or updates from the new issuer.
The card issuer goes out of business: If your credit card issuer goes out of business and is unable to find a buyer, your account may be closed, and you may no longer be able to use your card. In this case, you will still be responsible for paying off any outstanding balances on the card, but you may be able to negotiate new payment terms with the card issuer or its bankruptcy trustee.
Your card is secured by collateral: If your business credit card is secured by collateral, such as a deposit or a lien on your property, the fate of your card may depend on the terms of your collateral agreement. If the collateral is held by the bank that fails, you may need to work with the FDIC or another agency to retrieve your collateral and settle your account.
Your card is unsecured: If your business credit card is unsecured, meaning it is not backed by collateral, the card issuer may be able to write off the debt in the event of a bank failure. However, you will still be responsible for paying off any outstanding balances on the card, and the card issuer may be willing to negotiate new payment terms or a settlement agreement.
It's important to stay in communication with your credit card issuer and any relevant agencies, such as the FDIC, to ensure that you understand your options and obligations in the event of a bank failure. Additionally, you should review your credit card agreement and any notices or updates from the issuer to stay informed about any changes to the terms and conditions of your card.
