How long can you leave a credit card unused?

Keeping Your Credit Cards Active: Understanding Inactivity and Its Impact

We all have those credit cards that get tucked away in a drawer, forgotten until that next big purchase. But did you know that neglecting your credit cards can have unexpected consequences? While it’s tempting to think you can just keep them dormant, credit card inactivity can lead to closure, potentially impacting your credit score and access to credit.

The Inactivity Trap: When Does a Credit Card Become “Inactive”?

There’s no universal definition of “inactive” when it comes to credit cards. However, generally, accounts tend to be considered inactive after six to twelve months of no usage. This timeframe isn’t standardized and varies significantly depending on the specific card provider’s policies. Some issuers might close inactive accounts after just a few months, while others might be more lenient and wait longer.

Why Do Credit Card Companies Close Inactive Accounts?

There are several reasons why credit card companies might choose to close inactive accounts:

• Reduced Revenue: Inactive accounts don’t generate interest or fees, making them financially less attractive to the issuer.
• Risk Management: Inactive accounts can become a security risk, potentially attracting fraudsters.
• Compliance: Some regulations may encourage card issuers to close inactive accounts to prevent money laundering and other financial crimes.

The Impact of Credit Card Closure

Having a credit card closed for inactivity can negatively impact your credit score in a few ways:

• Lowering Your Credit Utilization: A closed credit card account will reduce your total available credit, which can increase your credit utilization ratio. This is a significant factor in your credit score.
• Shortening Your Credit History: The age of your credit history is a crucial aspect of your credit score. Closing an old account can shorten your overall credit history, potentially lowering your score.
• Impact on Future Credit Applications: A closed credit card account, particularly if it’s closed for inactivity, can raise red flags for future lenders. They may perceive it as a sign of financial instability or a lack of credit responsibility.

How to Avoid Credit Card Inactivity

To avoid the negative consequences of credit card inactivity, it’s essential to keep your accounts active. Here are some ways to do that:

• Make a Small Purchase: Regularly make a small purchase on your credit card, even if it’s just a coffee or a magazine subscription. This keeps the account active and shows the issuer that you are using it.
• Set Up Automatic Payments: If you have recurring bills like utilities or subscriptions, set up automatic payments through your credit card. This ensures regular activity on the account.
• Use Your Credit Card for Everyday Purchases: Consider using your credit card for everyday purchases, like groceries or gas, and paying off the balance in full each month. This will help maintain your credit score and keep your accounts active.

Remember:

• Contact your credit card issuer to understand their specific inactivity policies.
• Stay informed about your account activity and ensure you’re making at least a small purchase every few months to avoid potential closure.
• Don’t fall into the trap of neglecting your credit cards. By keeping them active, you’re protecting your credit score and ensuring continued access to credit when you need it.