Is it okay to keep a credit card and not use it?

The Delicate Dance of Credit Card Retention: A Guide to Inactive Accounts

In the ever-evolving realm of personal finance, managing credit cards can be a delicate balancing act. The allure of convenience and rewards often tempts us to acquire multiple cards, but what happens when we find ourselves holding onto a credit card that remains dormant, gathering dust in our wallets? Is it okay to keep a credit card and not use it?

The Answer: Yes, with Caveats

The short answer is yes, it is perfectly acceptable to maintain a low-activity credit card, provided you take certain precautions to prevent it from being canceled. The key lies in understanding the concept of “credit line preservation.”

Credit lines are like lifelines in the financial world. They represent the amount of money you can borrow from a lender. Unused credit cards gradually deteriorate your credit line, making it more difficult to access funds when you need them most.

The 6-12 Month Rule

To preserve your credit line, it’s crucial to make a small purchase every six to twelve months. This simple action signifies to the issuer that the card is active and being used responsibly. By doing so, you prevent the card from being subject to cancellation due to inactivity.

Benefits of Low-Activity Credit Cards

Maintaining a credit card without active usage offers several benefits:

• Safeguards Credit Line: Preserves your credit line for future emergencies or unexpected expenses.
• Prevents Reapplication Hassle: Avoids the trouble of reapplying for a credit card if you need one in the future.
• Retains Account History: Keeps your account history intact, contributing positively to your credit score.

Cautions to Consider

While keeping a low-activity credit card can be beneficial, there are a few potential drawbacks to be aware of:

• Annual Fees: Some credit cards charge annual fees, even if they’re not actively used. Ensure that the benefits of maintaining the card outweigh the fees.
• Interest Charges: If you make a purchase on your low-activity card, interest charges may accumulate if the balance is not paid off promptly.
• Fraudulent Use: Unmonitored cards could become targets for fraudulent activity. Check your credit card statements regularly to detect any suspicious transactions.

Conclusion

Maintaining a low-activity credit card can be a strategic financial move, provided you adhere to the “6-12 Month Rule.” By making small purchases at regular intervals, you can preserve your credit line, avoid reapplication hassles, and maintain your account history. However, it’s essential to weigh the potential benefits against the potential risks and make informed decisions to manage your credit wisely.