What should I do with a credit card I never use?

Unlock the Hidden Power of Dormant Credit Cards: A Guide to Credit Health

In the realm of personal finance, credit cards are often seen as tools for convenience and rewards. However, what happens when you have a credit card tucked away in your wallet that you barely use? While it may seem harmless to let these dormant cards gather dust, they could actually be hindering your credit score, a crucial element in your financial well-being.

The Perils of Inactivity

When a credit card is inactive, it can negatively impact your credit score in two key ways:

• Credit Utilization: Credit utilization measures the amount of credit you’re using compared to your total available credit. Even if you don’t carry a balance on your unused credit card, it still counts towards your overall credit utilization. If your credit utilization is too high, it can lower your credit score.
• Credit History: The length of your credit history is also a significant factor in your credit score. If you have an inactive credit card for an extended period, it can shorten your average credit age, which can hurt your score.

Reactivating Your Credit Cards for Success

To maintain a healthy credit profile, it’s important to strategically utilize even the most seldom-used credit cards. Here are a few steps you can take:

• Set Up a Small, Automated Payment: Choose a small, recurring bill and set up automatic payments from your unused credit card. This ensures that the card remains active and that you consistently make on-time payments, which boosts your credit history.
• Use It for Small Purchases: If you find yourself making small purchases that you typically pay for with cash, try using your inactive credit card instead. This will provide some activity on the card and help maintain its status.
• Transfer a Small Balance: If you have a credit card with a balance, consider transferring a small portion of it to your inactive card. This will increase your credit utilization and demonstrate to lenders that you’re managing your credit responsibly.

Benefits of Active Credit Cards

By keeping your dormant credit cards active, you can not only protect your credit score but also reap some potential benefits:

• Improved Credit Score: Active credit cards help maintain a healthy credit history and improve your credit score over time.
• Enhanced Creditworthiness: A higher credit score can make you more attractive to lenders and qualify you for lower interest rates on loans and mortgages.
• Peace of Mind: Knowing that your credit cards are active and being used responsibly provides peace of mind and gives you a sense of control over your financial health.

Remember:

• While it’s important to keep your credit cards active, it’s equally crucial to avoid overspending or carrying a balance you can’t afford.
• Regularly review your credit report to monitor the status of your credit cards and make any adjustments as needed.
• If you’re struggling to make on-time payments on your credit cards, seek professional financial advice to explore debt management options.

In conclusion, dormant credit cards can silently damage your credit score. By following the steps outlined above, you can effectively reactivate your unused cards and harness their power to maintain and enhance your credit health. Remember, a strong credit score is the cornerstone of a stable financial future.