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Last Updated: Saturday, 22 November, 2003, 12:22 GMT
Concern over credit card accounts
By Chris A'Court
BBC Radio 4's Money Box

Credit card
Barclaycard says a card is only truly closed a year after its expiry date

Credit card accounts can remain open for up to three years after people request to close them, BBC Radio 4's Money Box has discovered.

And in an age when card fraud is rife, this can be a problem if the card number falls into the wrong hands, or a mistake is made.

Kate, from Hertfordshire, thought she had closed her Barclaycard account once and for all when she told the card company she no longer wished to be a customer in 2002.

She received written confirmation that her account was closed and cut up her card.

I was dumbfounded that what I thought was a simple English word to understand - closed - did not mean closed
Kate, Barclaycard customer

But 17 months later, Kate was startled to discover that someone else had bought goods on her closed account, and that she was being ordered to pay.

In a telephone conversation with the card company, Kate learned that someone else had mistakenly quoted her number when buying goods.

She told the programme: "Barclaycard told me the account had been closed, but not terminated. The account remains open unbeknown to the account holder because it suits them for administrative purposes to do so.

"I was dumbfounded that what I thought was a simple English word to understand - closed - did not mean closed.'

Annual subscriptions

Barclaycard's Ian Barber confirmed this does happen: "Details of the account remain on our systems and we are actually able to accept transactions onto the account after the account has been closed."

He said this primarily happens because people might have forgotten they have set up annual subscription payments on a credit card account, and keeping the account open means such payments will still be honoured.

In Kate's case a stranger had successfully been able to make a purchase on her closed account because each trader has a so-called 'floor limit', an amount below which they do not need to call to check if the account is valid.

If you were able to... go on spending, and we did not know anything about it because the account did not exist any more, that would be a loophole for fraudsters
Ian Barber, Barclaycard

Barclaycard says a card is only truly closed - or terminated - a year after its expiry date.

Since most cards are valid for two years that means a card cancelled shortly after it has been received will officially remain open to accept some payments for nearly three years.

But Ian Barber says changing the system would not be right and insists it is designed to protect customers. He explained the account stayed open to prevent fraud:

"If you were able to close your account and then go on spending, and we did not know anything about it because the account didn't exist any more, that would be a loophole for fraudsters."

This means the onus is on card customers to realise card accounts remain open, keep watching for statements, and to inform the card company if they change address, even though they might think it is no longer necessary.

BBC Radio 4's Money Box was broadcast on Saturday, 22 November, 2003 at 1204 GMT

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