Have you ever wondered what happens if I don’t use my credit card?
Let’s say you opened a new credit card because it had a great introductory offer, but you stopped using it after you earned the reward. What happens next?
In the event that you don’t utilize your credit card, the card issuer might close your record. You are likewise more helpless to misrepresentation in the event that you’re not vigilant about investigating the inert card, and fraudulent charges can influence your credit rating and funds.
While not much occurs in the event that you don’t utilize your credit card for a month, you ought to think about shutting a record assuming you intend to allow it to sit inactive endlessly.
At the end of the day, credit card debt is dreadful and it’s brilliant to keep away from it. Nonetheless, not utilizing your credit cards at all can likewise have outcomes that ought to be considered prior to lock up your cards.
What Happens If I Don’t Use My Credit Card? – The Danger of Having an Account 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 affects your credit utilization ratio – a measure of how much credit you use in relation to your total available credit.
And if the card is one of your oldest credit accounts, that can lower the age of your credit history, bringing down the average age of the accounts in your report and lowering 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.
- Your card could be canceled
Credit card companies bring in cash from credit cards in various ways, including yearly charges, premium expenses, and late charges. However, the main kind of revenue for card backers is the handling expenses they charge dealers each time you swipe.
Unused credit cards don’t bring in any cash and an open credit card account costs cash to keep up with and screen. In this way, the most widely recognized result of releasing your card unused is that the card guarantor essentially drops your unused credit card and shuts the record.
There is no firm rule with regards to how long a credit card organization will permit you to keep your unused credit card on ice. Not exclusively do they decide when all is good and well, however, they are not legally necessary to give you notice.
While it might seem like no biggie in the event that the guarantor drops a card you’re not utilizing at any rate, a dropped card can hurt your credit score in several different ways:
Your credit utilization ratio could increment. This is the second most significant variable in ascertaining your credit score and measures the sum you owe compared to your accessible credit. Your credit card record will quit maturing.
A significant element in your credit score is the length of your credit history, which incorporates both the age of your most seasoned account and the normal age of your records in general. While a dropped credit account won’t drop off your credit report right away, that record quits maturing.
This could make your normal record age go down, particularly on the off chance that the dropped card is one of your more seasoned accounts.
Despite the fact that it’s not ensured that an unused credit card will be dropped, shutting credit cards that aren’t dynamic is a typical practice.
Except if you’re certain the shut card won’t cause an issue or you’re paying a yearly charge for a card you’re not utilizing attempt to utilize every one of your credit cards in some measure at regular intervals to keep the records dynamic and your payment history new.
- You could overlook card activity
At the same time, you’re asking yourself, “What happens if I don’t use my credit card?” consider the question: “What’s going on with my unused credit card while I’m not looking?” If you’re not using a credit card, you may not be regularly logging into your account. This opens the door for credit card fraud.
There were 650,572 reported cases of identity theft in the U.S. in 2019, and 41.8% of those cases involved credit card fraud. If you’ve never been a victim of fraud, you may not realize that the bad guys sometimes take your credit card number for a “test run” by purchasing something small. If that crime is not reported, they know that it’s safe to make larger purchases.
It’s also easy to miss other charges that appear and accidentally miss a payment. These include annual credit card fees and irregular payments for things like satellite radio, subscription services, and gym memberships.
Missed payments cost you late fees and harm your credit score. So, even if you’re not regularly using your cards, be sure to keep an eye on your statements just in case.
- Overlooking Fraudulent Activity
The most dangerous risk of not using a card is that you might stop looking at your statements, too. 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.
- Make your card work for you
The fact of the matter is, you typically have to use a credit card on occasion to keep it alive. How often you should pull it out is a matter of opinion, but making at least a small purchase every few months can keep an otherwise unused credit card account from being closed.
It will also encourage you to check your statements every month, making it easier to spot fraud or recurring charges.
The ideal way to use any credit card is to purchase what you need, gain valuable rewards, and never carry a balance into the next month. No matter what your current situation is, you likely don’t need to stop using your credit card. Instead, you need to make it work for you — and not the other way around.
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.
However, if the card has an annual fee, you will have to pay that fee whether you use the card or not.
How Long Can You Go Without Using a Credit Card?
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 credit card issuer about its policy if you want to avoid a surprise account closure.
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 the card modestly active is to make a single, regular charge on the card.
Thanks for reading this article on What Happens If I Don’t Use My Credit Card. Moreover, not using your credit cards at all can also have consequences that should be considered before sentencing your cards to a life under lock and key.