Will my credit card get cancelled if I don't use it?

Inactive Credit Cards: The Risk of Cancellation

In the realm of personal finance, credit cards play a pivotal role in managing expenses and building credit. However, what happens if a credit card remains unused and neglected for an extended period of time? The answer is both simple and potentially costly: your credit card could be canceled.

Why Unutilized Credit Cards Are at Risk

Credit card issuers consider inactive accounts as a liability. These dormant accounts generate no revenue, as they are not being used for transactions. The cost of maintaining these accounts, such as fees and insurance, weighs heavily on the issuer’s bottom line.

As a result, many credit card issuers implement policies to close inactive accounts after a period of inactivity, typically around one year or more. This measure helps the issuer reduce costs and mitigate the risk of fraudulent activity on unused cards.

Consequences of Cancellation

The cancellation of a credit card can have several detrimental consequences:

• Negative impact on credit score: Inactive accounts can reduce the length of your credit history, which is a key factor in determining your credit score. Closing the account altogether can further damage your score.
• Loss of benefits: Many credit cards offer valuable rewards programs, travel perks, and other benefits. These benefits are typically lost when the card is canceled.
• Potential fees: Some issuers charge a fee for closing an account, adding to the financial burden of inactivity.

Preventing Account Cancellation

To avoid the hassle and potential damage to your credit score, it is crucial to keep your credit cards active. Here are some simple steps you can take:

• Make small purchases: Use your card for even the smallest purchases, such as a cup of coffee or a book.
• Set up recurring payments: Enroll in automatic bill payments for essential expenses like utilities or subscriptions.
• Use the card for online subscriptions: Pay for streaming services, gym memberships, or other recurring expenses with your card.

Conclusion

Using your credit cards regularly is not only beneficial for building credit but also for preventing account cancellation. By following these simple tips, you can keep your credit cards active and avoid the potential consequences of inactivity. Remember, a credit card should be treated as a tool for financial management, not left to gather dust in your wallet.