What Happens if You Don’t Use Your Credit Card: What happens if you don’t use your credit card for long stretches of time? By using a credit card, you don’t slip into credit card debt and you can stop extremely high-interest rates on your purchases
Sending one or two credit cards to the sidelines can be a smart way to stay out of debt. But 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:
You may have been told that the best way to get out of debt is to hide your credit card away so you can’t access it when you’re tempted to make spur-of-the-moment purchases.
You may have even heard that you should cut your card into small pieces, ensuring that you never use it again. If you regularly charge more than you can afford, both ideas may sound inviting, particularly if your credit card does not charge an annual fee.
Credit card debt is awful and it is smart to avoid it. However, if you don’t use your card at all, you risk it being canceled due to inactivity. You may also put yourself at an increased risk of credit card fraud and accidental missed payments.
What Happens to an Unused Credit Card
The Danger of Having an Account Closed
The other risk 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, Dlugozima says.
“One possibility could be that if you’re not using an account at all and they don’t know what your income situation is, the lack of information could be considered a risk to them,” he says.
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.
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,” you may miss fraudulent charges.
There were 650,572 reported cases of identity theft in the U.S. in 2019. 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.
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.
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 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.
The bottom line: if you want to have access to your card when you need it, not using it could take away that option.
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.
No matter what your current situation is, you don’t need to stop using your credit card. Instead, you need to make it work for you — and not the other way around.
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