Do credit cards get cancelled if not used?

Do Credit Cards Get Cancelled if Not Used?

It’s a common misconception that credit cards can remain active indefinitely without use. In reality, unused credit cards often face closure after a period of prolonged inactivity.

Why Are Unused Credit Cards Cancelled?

Credit card issuers rely on revenue generated from transaction fees and interest payments. When a credit card is not used, the issuer loses this potential revenue. As a result, many issuers have policies in place to cancel unused credit cards to minimize losses.

How Long Can a Credit Card Go Unused Before Cancellation?

The specific timeframe for cancellation varies depending on the issuer and the terms of your credit card agreement. However, it’s generally safe to assume that a year or more of non-usage can trigger account cancellation.

Consequences of Credit Card Cancellation

Canceling a credit card can have negative consequences on your credit score. When a credit card is closed, it reduces the amount of available credit you have, which can increase your credit utilization ratio. A high credit utilization ratio can lower your credit score, making it more difficult to qualify for loans and other forms of credit in the future.

Avoiding Credit Card Cancellation

To prevent your credit card from being cancelled, it’s important to use it regularly. Even small purchases can help keep your account active. If you’re not using your credit card for everyday expenses, consider using it for subscription services, online shopping, or occasional dining out.

Alternatives to Cancellation

If you’re not able to use your credit card regularly, there are alternatives to cancellation. Some issuers offer options such as:

• Dormant Account: This allows you to keep your account open without using it. You may have to pay a small annual fee to maintain the account.
• Balance Transfer: You can transfer the balance from your unused credit card to another active card. This will close the unused account but keep your credit history intact.

Conclusion

Unused credit cards can face closure after a period of prolonged inactivity. It’s important to be aware of your issuer’s policy to avoid cancellation. To maintain your credit score and keep your credit options open, make sure to use your credit cards regularly or explore alternative options.