What Happens If You Don’t Use Your Credit Card?

Introduction

It’s not unusual to have a credit card for most purchases and another card only used for certain purchases, perhaps because it earns rewards on a specific type of transaction, like gas or travel.

The latter card might only be used every few weeks or so. But what happens if you don’t use a card for even longer?

What to Expect If Your Credit Card Goes Unused

Initially — especially if the lack of use is just a short period of time — not much will likely happen. However, while there’s no definitive rule as to how often you need to (or should) use your card to build positive credit or enjoy rewards, you may face some potential impacts due to card inactivity over a longer period.

You Might Miss Fraudulent Activity

One potential issue you could face if you don’t use your card is overlooking fraudulent activity on your account.

If your credit card is in a drawer collecting dust, you’re also not likely keeping an eye on your account activity, be it via online or your account statements. So, if someone happens to put a fraudulent charge on your account — and you’re not paying the attention needed to spot that charge — it can have an impact on your finances.

Your Account Could Be Closed

Account closure is another potential result of not using your card. The amount of inactive time it takes for your card to be closed may range from issuer to issuer, but it can happen. And while this may not be a big deal to some, closing an account could also have a bigger negative effect on your finances than just removing a payment option from your wallet.

Your Credit Score Could Be Impacted

All the previously mentioned impacts of card inactivity can also negatively affect your credit score, because of these factors used in calculating credit scores.

• Payment history: If you have a balance on your account while the card is collecting dust — whether it’s from a purchase you had previously made or a fraudulent purchase you had no idea about — not only will it continue accruing interest, but it may also lower your credit score if you miss the payment due dates. This is because payment history is the most significant factor in calculating credit scores. 

• Credit utilization ratio: If your unused card account ends up closing, that can also lower your credit score by affecting your credit utilization ratio (CUR). Your CUR represents how much of your total credit line is in use and a closed account no longer contributes to your total available credit. 

• Length of credit history: Your credit history is another important factor. If you’ve had a card for a long time and it gets closed for inactivity, it can impact your score by lowering the average age of your accounts. And if it was your oldest card, it could lower the overall length of your credit history and average age of accounts as well.

• Credit mix: Credit mix represents the combination of credit accounts you have, which can include revolving, installment and open credit. If your credit card is closed — and if it was your only revolving credit account — it could negatively impact your score by affecting your credit mix.

Why is Credit Utilization Ratio Important?

Credit utilization ratio is the second most important factor in a credit score after payment history, determining between 20 to 30% of your score depending on the scoring model. It’s also a factor that’s directly impacted by closing a credit card account.

Your CUR is the amount of credit you are using compared to your total available credit. Experts recommend keeping utilization below 30%.

Credit score calculations consider each individual card’s utilization as well as aggregate utilization across all cards. If you close a credit card account — or allow one to close due to inactivity — it will lower your total available credit, affecting the aggregate.

So, let’s say you have two credit cards with $500 credit limits, for a total of $1,000 available credit. Card A has a $300 balance and Card B has a $0 balance. This means you’re at 30% aggregate utilization.

But if Card B is closed, you’re suddenly at 60% overall utilization. Before closing an account or allowing a card to lapse, you may want to consider the impact it will have on your CUR. That card’s available credit could help your credit score without you realizing it.

How Long Can You Keep a Credit Card Without Using It?

There’s no standard timeline for when a card is considered inactive. This could depend on the issuer’s policies, the card itself and perhaps other factors as well.

That said, six months to a year is a common benchmark for account closure due to inactivity. You can always make a small charge on occasion, but if you are concerned that your card might not be active enough, you can contact your issuer to ask if they have a specific policy.

Will I Be Charged For Not Using a Credit Card?

Generally speaking, you won’t be charged a fee just for having an inactive credit card. Inactivity fees for credit cards were banned in 2010 as part of the Truth in Lending Act.

But there are other fees, like annual fees, that may still be charged even if you aren’t actively using a card.

Should You Cancel Unused Credit Cards?

If you find yourself not using a credit card, you may be wondering if it’s worth keeping the card open. There isn’t really a one-size-fits-all answer for this situation, but you might want to ask a few things.

First off, how will closing this card impact your utilization, credit mix and credit history? A card you’ve had a long time or with a large credit limit can benefit your credit score, even if you rarely use it.

Does the card have benefits you use or could use? If you close the account, you’ll lose access to all of its benefits. On the flip side, if you don’t use those benefits and the card comes with an annual fee, it may not be worth keeping the card open.

Can the card be converted to a different card? If you aren’t using the card, you may be able to contact your lender and ask them to switch it to a different card that works better for you, without closing the account. This might be a card with a rewards program that better matches your spending or one without an annual fee.

There may be cases where it makes sense to close a credit card account. Maybe it has a high annual fee for benefits that you don’t really use — and no option to change it to a fee-free version. Or maybe you don’t want to manage several accounts.

If you go down this route, remember to redeem any rewards you’ve earned. And you’ll still have to pay off your balance, including interest charges.

Your credit score may take a hit after closing a credit card account, but as long as you continue practicing good credit habits this should be temporary.

How To Keep Your Credit Card Account Active

So, what can one do to keep a card active? It’s pretty simple: use the card every once in a while.

You don’t have to make a big purchase or carry a large balance. It can be something as simple as using your credit card to fill up your car with gas, buying groceries, or setting up your card for automatic payments on a recurring charge such as a streaming service or gym membership.

Regardless of what the purchase is, the important thing is to do so strategically and always be sure to have a plan to pay the balance off in a timely manner. This way, your credit score can get the benefit of positive payment activity.

FAQs

Can I be charged a fee for having an inactive credit card?

Inactivity fees for credit cards were banned in 2010, so lenders can’t charge you a fee just for having an inactive credit card. But a card’s annual fee, or other fees, may still be charged, even if you aren’t actively using a credit card.

Can an issuer close a credit card account if I carry a balance?

Credit card issuers can close credit card accounts, including ones with a balance, for a number of reasons, such as changes in your credit score or credit report. If an issuer closes a credit card account with a balance on it, that balance must still be paid by the cardholder.

What steps should I take before closing an unused credit card?

If you’ve decided to close an unused credit card, you may want to update your payment info with any AutoPay services you used the card for, pay off the balance (or make payment plan arrangements with the issuer) and redeem any rewards you earned.

How long can my credit card stay inactive before the issuer closes it?

There’s no set timeline for how long a card can stay inactive before the issuer closes the account, but using your card at least every six months can keep the account active.

What happens to my rewards if I stop using my credit card?

Some credit card rewards may expire over time, particularly ones tied to specific travel rewards programs. And if your credit card account is closed with unclaimed rewards, they may be lost. It’s best to confirm how your issuer or specific credit card works.

Bottom Line

You don’t have to use a credit card every day for it to help you, but you usually do need to use it on occasion. Just keeping an older card open can benefit your credit score.

So, if there’s no other reason to close the card, go ahead and make a charge on it now and then. It’ll help keep the account open and help your credit score.