You opened a credit card because it had a great introductory offer but stopped using it after you earned the reward. What happens next?
If you don’t use your credit card, the card issuer may close your account. You are also more susceptible to fraud if you aren’t vigilant about checking up on the inactive card, and fraudulent charges can affect your credit rating and finances.
While not much happens if you don’t use your credit card for a month, you should consider closing an account if you plan to let it sit idle indefinitely.
Overlooking Fraudulent Activity
The most dangerous risk of not using a card is that you might also stop looking at your statements. Failing to monitor your account might leave you in the dark about fraudulent activity. With a card out of sight and mind, you could miss seeing a fraudulent charge until long after it occurs.
“You’re not going to be nearly as likely to stay on top of what’s happening,” says Chris Dlugozima, learning experience designer at GreenPath Financial Wellness, a nonprofit debt counseling service.
The longer you overlook the card, the more damaging fraudulent activity can become, says Linda Jacob, accredited financial counselor with Consumer Credit of Des Moines in Iowa and author of “No More Paycheck to Paycheck: Stop Living in Debt and Start Living the Dream.”
“If you’re not paying attention, that could go on for months,” Jacob says.
The Danger of Having a Credit Card Closed
The other risk of leaving a card inactive is the issuer might decide to close the account.
If you haven’t used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip. That’s because losing a source of credit can affect your credit utilization ratio – the percentage of your total available credit you’re using.
And if the card is one of your oldest, closing it can hurt the length of your credit history, which accounts for 15% of your FICO score. That can bring down the average age of the accounts in your credit report and lower your credit score.
Another consequence of having an account closed is that you may lose any accumulated rewards, such as airline miles associated with the account.
Do You Get Charged for Not Using a Credit Card?
In the past, issuers could charge credit card inactivity fees if you failed to use your card for a long period. However, the Federal Reserve banned this practice in 2010.
If the card has an annual fee, you will have to pay it regardless of whether you use the card.
How Long Can You Go Without Using a Credit Card Before It Will Be Closed?
There are no hard-and-fast industry rules or standards as to when – or even if – a lender will close your account after a period of inactivity. You shouldn’t be concerned about leaving your credit card unused for a month or so, but a longer period warrants reaching out to your issuer about its policy to avoid a surprise closure.
Dlugozima says he has owned credit cards that the issuer shut down after just six months or a year of inactivity. “But I had another card that I didn’t use, and they just kept on sending me new cards, kind of begging me to start using them,” he says.
An issuer will be in no hurry to close an unused card, Jacob says. “They are going to leave it open,” she says. “That’s their business.”
How Can You Keep Credit Cards Active?
If you want to keep your card account active, it’s best to occasionally use the card and check your statements every month for fraudulent charges. The key is to strike a balance somewhere between using the card too little and using it too much.
One way to keep a card modestly active is to make a single, regular charge on the card. For example, Dlugozima suggests using the card to pay a monthly streaming service or cellphone bill.
“Set up some sort of automated charge on the cards you are not using,” he says. “In essence, what that’s doing is keeping that activity happening.”
Jacob recommends a similar approach to her clients and says she even uses this tactic with her spouse. “We have one credit card that we use just for gas,” she says.