If you have multiple credit card accounts, you might find that, over time, you naturally stop using some of them. But it’s important to understand what happens if you don't use your credit card at all. Inactivity on a consumer credit card can lead to some unplanned, and maybe unpleasant, outcomes – both for your credit score and your overall financial health.

So, what happens if you don’t use your credit card? Here’s a full overview of how inactivity can impact your accounts, plus the steps you can take to keep your financial profile healthy.

Impact on Credit Score

It's important to understand how an unused credit card affects your credit score and financial profile. When you stop using a credit card or have it closed because of inactivity, several elements of your credit score may be affected, as outlined below:

  • Credit utilization ratio: Closing an account lowers your total credit limit, which can cause your credit utilization ratio to increase. High utilization may indicates a higher reliance on credit and can sometimes cause your score to drop.

  • Credit history: If the closed account was one of your oldest, it may shorten the average age of your credit accounts, which is crucial in scoring models like FICO® and VantageScore®.

  • Credit mix: Credit bureaus consider the types of credit you hold, including both revolving credit (like credit cards) and installment loans (like personal loans). If your inactive card is your only form of revolving credit, closing it could reduce your credit mix and slightly impact your score.

Inactive Account Fees

You may wonder whether there are fees associated with not using a credit card. The good news is that inactivity fees were banned in 2010, so you won’t be penalized for leaving your card unused. But – if your credit card company charges an annual fee, that cost will apply regardless of whether you use your card. Make sure you factor in these costs when considering how much you want to use a particular credit card. Annual fees can be an extra expense if you're not using your card.

Credit Limit Management

If you leave a credit card unused, your credit card issuer may take action to manage the account. Many credit card companies will close an inactive account after a certain period – usually between six months and a year. However, there’s no industry standard, so the timeline can vary by credit card company. When an account closes, it affects your credit report by decreasing your available credit and potentially impacting your credit utilization rate.

Another common action credit issuers might take on inactive accounts is to reduce your credit limit. This can affect your credit utilization ratio, which plays a major role in determining your credit scores. For the most positive impact on your credit health, generally it is a good recommendation to keep your credit utilization below 30 percent.

Expiration and Closure

When you stop using your card altogether, your credit issuer may decide to close the account. Each issuer has its own policy on credit card usage and inactivity, so the timeline can vary widely – for example, from six months to a year or even longer. For most people, an unused card might seem harmless, but an unexpected closure could impact your credit score and even disrupt your credit utilization ratio if that card contributed to your total credit limit. So it's smart to track of your credit card issuer’s inactivity policy.

A sudden closure because of inactivity could affect your credit history, too. If the closed account was one of the first ones you opened, your average credit age might drop, which can lower your credit score. This factor is especially significant if you're working to build or improve your credit, since older accounts help demonstrate a long history of responsible credit use.

Overall, keeping your card open can positively impact your credit history. If you’re concerned about a closed account, it’s a good idea to reach out to your credit card company to find out more about their inactivity policy.

Effect on Credit Card Rewards

Aside from credit scores, not using your credit card account can also affect any rewards you may have accrued – like cash back, points or miles. If your card issuer closes an unused account, you might lose these rewards, since they’re usually tied to having an active account.

For example, if you've been saving up travel points or cash back, all those benefits could vanish if the issuer decides to close your card because you aren’t using it. Losing these rewards can be especially frustrating if you were saving them for a big purchase or upcoming trip. And letting your points expire can be a bad idea if you value those rewards.

To avoid missing out on rewards, make sure you stay on top of any expiration policies that your credit card company may have.

Security and Monitoring

Even if you rarely use a credit card, it’s wise to monitor your accounts regularly. When a credit card sits idle, it’s easy to overlook the possibility of fraudulent charges or recurring fees. If you're not monitoring your monthly statements, you might miss unauthorized charges that could affect both your finances and your credit history. While federal law protects against fraud, noticing and reporting it promptly is the best way to minimize its impact.

Reactivation Procedures and Considerations

Making small purchases can help keep your account active. And if you have a low interest rate on an inactive card, it might be worth keeping it open to preserve this rate. Many card issuers will welcome you back as an active user, especially if you demonstrate a commitment to using your card responsibly. However – if your account has been closed because of inactivity, you may need to apply for a new credit card.

Key Takeaways

Leaving a credit card unused is usually harmless in the short term, but over a long period of time, it can lead to account closures or reductions to your credit limit that could impact your credit score. It’s also important to keep in mind that credit cards are just one part of your financial products portfolio.

If you understand how card inactivity affects your financial health, you can make better strategic decisions about your credit card accounts. And over time, you can maintain a strong credit profile and manage your finances with confidence.

Regularly using your card for small purchases or setting up automatic payments for services like streaming can help keep accounts active and make sure you’re not caught off guard by a sudden account closure. If you do this, you can also link your credit card to a bank account for automatic bill payments. Just make sure you have the balance to pay the automatic bills so you avoid overdraft fees.

Remember, staying engaged with your credit cards not only protects your credit history but also enhances your overall financial wellbeing.