What happens if you order a credit card and never use it?

The Sleeping Giant: What Happens When You Order a Credit Card and Never Use It?

That shiny new credit card, promising effortless purchases and rewards, sits unused in your wallet. You envisioned a future of convenient spending, but life intervened. While the intention was good, the card remains dormant. What happens now? The answer, unfortunately, isn’t as simple as “nothing.” Inactivity on a newly acquired credit card can, and often does, lead to its demise.

Credit card companies, despite their eagerness to onboard new customers, aren’t in the business of maintaining accounts that generate zero revenue. After a period of inactivity, typically ranging from one to two years, many institutions will close dormant accounts, regardless of your credit score or existing credit utilization. This isn’t a malicious act; it’s simply a cost-cutting measure. Maintaining inactive accounts requires resources – server space, customer service support for potential inquiries, and regulatory compliance.

The consequences of having your card closed due to inactivity extend beyond simply losing access to credit. A closed account, even a brand-new one, can negatively impact your credit report. While the impact might not be as severe as a default, it can still affect your credit score in several ways:

• Shorter credit history: The length of your credit history is a significant factor in your credit score. Closing a relatively new account shortens your overall credit history, potentially lowering your score.
• Reduced available credit: This closure reduces your total available credit, affecting your credit utilization ratio – the amount of credit you use compared to your total available credit. A high credit utilization ratio can negatively impact your credit score.
• Lowered average age of accounts: The average age of your credit accounts is also a factor. Closing a newer account can skew this average downwards.

Furthermore, closing the account can impact future credit applications. Lenders often examine your credit history to assess your creditworthiness. A pattern of opening and closing accounts quickly can be perceived negatively, making it harder to secure loans or credit cards in the future.

Therefore, while the temptation to leave a new credit card unused might be strong, it’s crucial to understand the potential drawbacks. Activating the card and making at least a small purchase (and paying it off promptly!) once a month or two is a simple step that can prevent account closure and maintain a healthy credit profile. Consider setting up a recurring payment for a small amount, such as a subscription service, to ensure regular activity without significantly altering your spending habits.

In short, while a new, unused credit card might seem harmless, it’s a sleeping giant that can unexpectedly wake up to cause credit score damage. A little proactive engagement can ensure it remains a valuable asset, rather than a liability.