If a Store Closes, Do You Still Pay Your Credit Card?

When a store closes its doors, do you still have to pay your credit card balance? The answer is yes. Credit card debt represents a legal obligation to the financial institution that issued the card, not the specific merchant where purchases were made. This distinction is important for understanding why your payment responsibilities remain unchanged, even if a retailer ceases operations.

Understanding Who Owns Your Debt

Credit card transactions involve a fundamental relationship between three parties: you (the cardholder), the merchant (the store), and the credit card issuer (the bank or financial institution). When you make a purchase, the credit card issuer effectively pays the merchant on your behalf. You then become indebted directly to this issuer, forming a contractual agreement with them.

This structure applies to both general-purpose credit cards, such as those from major payment networks, and store-branded credit cards. While a store-branded card might carry a retailer’s logo, it is almost always issued and managed by a bank or financial services company, not the store itself. Your debt obligation is therefore a contract between you and the card-issuing bank, entirely separate from the merchant’s business operations.

What Happens When the Store Closes

The closure of a merchant, whether due to bankruptcy or other business decisions, does not eliminate your existing debt to the credit card issuer. Your contract is with the bank that extended the credit, and that financial institution retains the right to collect the money owed. The credit card account remains active with the issuer, and they will continue to manage your balance.

You will continue to receive monthly statements and notifications directly from the credit card issuer, not from the defunct store. In the case of a store-branded card, the issuer may decide to continue the card program, sometimes converting it into a general-purpose card that can be used elsewhere.

Maintaining Your Payment Schedule

It is important to continue making regular, on-time payments. You can typically find payment information on your monthly statements, through the issuer’s online portal, or by contacting their customer service department directly.

Failing to make payments can lead to various negative consequences. Late payments typically incur fees, which can range from approximately $30 to $41 for each instance, though new regulations are aiming to reduce these for large issuers. Additionally, interest will continue to accumulate on your outstanding balance, with average annual percentage rates (APRs) for credit cards often ranging from 21% to 24% or higher, depending on the card and your creditworthiness.

Payments reported as 30 days or more past due can negatively impact your credit scores, potentially making it more difficult to obtain future credit or loans. If non-payment continues, the issuer may escalate collection efforts, which could include the debt being sold to a third-party debt collector or, in some instances, legal action such as a lawsuit. If you have any uncertainty about your account status or payment methods after a store closure, contacting the credit card issuer directly can provide clarity and help you avoid adverse outcomes.