If you have a charged off credit card with a particular credit issuer, normally that company will not allow you to open a new credit card until you settle the existing debt. However, in theory, a credit card issuer may allow you to open a new card regardless of your past debt.
Consumers in the United States often receive letters in the mail informing them that a credit card company has pre-qualified them for a new credit card. If you receive such an offer from a company with which you have a past debt, do not assume it means the company has chosen to ignore that debt. Pre-qualification does not involve checking credit scores, income or even verifying the identity of an individual. Credit card companies pay vendors to supply them with information on people in geographic areas that might meet credit card qualification criteria because they own homes, live in high or moderate income areas and have not had any recent bankruptcies. Only after you accept the offer does the credit card issuer actually look at your specific information, including your past debt.
Credit activity, including charged off credit card debts, is reported to the major credit bureaus: Equifax, Experian and TransUnion. Details of derogatory credit activity remain on file for up to seven years. However, the credit card company itself can keep records on account activity for longer than seven years. If your delinquent debt no longer shows up on your credit report, do not assume the credit card company has deleted all records of it. When you apply for a new card with the same company, the record may come to light again.
Major Corporations Issuing Credit Cards
If you have a charged off account with a small local bank, the records of your delinquent account are easily located by employees of that bank. Major corporations often have multiple credit card divisions issuing different kinds of credit card products. You may get approved for a card with one division only for the compliance department to later discover that you have a charged off debt with another division of the same corporation. If that happens, the company can freeze your new card.
If a credit card company does allow you to open a new credit card, regardless of your past debt, you should expect to pay a very high rate of interest on the new card. Credit card interest rates are priced based on risk, and no one poses a higher risk to a card issuer than someone who has previously borrowed money from the company and failed to pay it back. The rates you pay on cards issued by any firm are higher if you have charged off cards, so settling the debt enables you to pay lower rates.