You might be wondering and probably getting worried about what happens if you don’t use your credit card for a long time. Actually, some glitches could come with that, like running into credit card debt and much more you could discover when you stick around.
What Happens if You Don’t Use Your Credit Card?
Sending one or two credit cards to the sidelines can be a smart way to stay out of credit card debt.
However, leaving a credit card unused for a long period does not come without risks.
There are two primary drawbacks to such a move. They include the fact that the lender might close the account, and you may be susceptible to fraud as well.
Moreover, many more drawbacks could possibly happen and they are all structured nicely for your consumption.
1. Your Account Might be Closed
One of the risks of leaving a card inactive is that your lender might decide to close the account. Lenders choose to close accounts for a variety of reasons.
One possibility could be that if you’re not using an account at all and they don’t know what your income situation is, they could consider the lack of information a risk to them.
If you decide not to use a card for a long period, it generally will not hurt your credit score. However, if a lender notices that period of 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.
2. You Could Overlook Card Activity
Ask yourself how likely you are to check the monthly statement associated with a card you’re not using. If the answer is “not very much,” you may miss fraudulent charges.
There were 650,572 reported cases of identity theft in the U.S. in 2019. Sadly, 41.8% of those 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.
3. You May Miss Fraudulent Charges on Your Card
If you haven’t used a card in a given month, it can be tempting to just assume everything is fine and not look at your statement.
But that may leave you vulnerable to overlooking any fraudulent charges that could go unseen for weeks or months.
It might be a good idea to online or on the app for the card to make sure nothing looks suspicious.
Not using your card at all could hurt your credit in the long run if you’re not aware of unauthorized charges.
4. Your Card Could Be Canceled
Credit card companies may close your account if you never use your card.
Closing a credit card account may have a negative impact on your credit score even if you didn’t intend to have it closed.
That’s especially true if this is the card you’ve had the longest. Having it closed due to inactivity could cause a dip in your credit score.
Plus, having your credit card canceled will take away the option of having it for emergencies and for things like hotel and car rentals, which often require a credit card.
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Should You Cancel a Card You Don’t Use Often?
The fact of the matter is, you have to use a credit card on occasion to keep it alive. How often you should pull it out is a matter of opinion.
To be on the safe side, try to charge at least one item per month and pay it off.
Even if it’s just a gallon of milk, the activity will show up as an on-time payment. Even more, the credit card company will view the card as active.
The ideal way to use any credit card is to purchase what you need. You can also gain valuable rewards, and never carry a balance into the next month.
The Danger of Having a Credit Card Closed
If you haven’t utilized a card for a long period, it generally will not hurt your credit score.
However, if a lender detects your inactivity and decides to close the account, it can cause your score to slip.
That’s because losing a source of credit can impact your credit utilization ratio negatively.
And if the card is one of your oldest, closing it can hurt the span 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 reduce your credit score.
Another consequence of having an account closed is that you may lose any accumulated dividends, such as airline miles associated with the account.
In the past, issuers could demand credit card inactivity fees if you failed to use your card for a long period.
However, the Federal Reserve outlawed this practice in 2010. If the card has an annual payment, you will have to pay it regardless of whether you use the card.
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How Long Before Credit Card Closure?
There are no hard-and-fast industry regulations or standards as to when, or even if a lender will close your account after a period of inactivity.
You shouldn’t be worried about leaving your credit card unused for a month or so.
However, a longer period warrants reaching out to your issuer about its policy to avoid a surprise closure.
To wrap up the query, ‘What happens if you don’t use your credit card?’, no matter what your current situation is, you don’t need to stop using your credit card.
Instead, you ought to make it work for you, and not the other way around.
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