What happens if you don't use your credit card

You get credit cards to get benefits from it and do transactions. But sometimes, we get credit cards during an offer, and as we have other credit cards too, we forget to use the card. But is it right not to use a credit card for a long time? What happens if you don’t use your credit card?

Actually, you should use your credit card or if you don’t want to, then get your card closed. If you do not use the card for a long time, then the card issuer may close your account. Moreover, any fraud activity can happen with your card, resulting in bank charges, which will affect your credit ratings, as you will not know about it. 

Let’s get to know more about this in detail & get answers to related queries!

What happens if you don’t use your credit card?

If you do not use your credit card for a month, nothing can happen, but if you do not use the card for more than this period, then your card issuer may decide to close your account. Here are the major things that can happen if you will not use the card for a long time:

Your Credit Score Can take a Hit.

Even if you only use your credit cards for minor and unimportant monthly transactions, it’s crucial to keep using them. Credit reporting agencies prefer to see that you can use your card responsibly, accumulate a small amount of debt, and then promptly pay it off. In addition, maintaining and improving your credit score both depend heavily on making good use of your available revolving credit.

The length of your credit history accounts for 15% of your credit score; therefore, if you close a credit card, you will reduce your credit score. However, even while this won’t major impact your score, it’s still necessary to be aware of the possibility.

Fraudulent activities can happen.

The likelihood is that if you don’t use a credit card, you’re not signing in on a frequent basis. There is a risk of credit card fraud because of this. If you’ve never been the victim of credit card theft, you may not be aware that the bad guys will sometimes purchase a little item to “test run.” If you don’t report the crime, they know it’s safe to buy bigger things.

Then you become a victim of identity theft fraud. 

Charges can be levied on Credit Card.

If you haven’t used a credit card in a given month, it can be tempting not to look at your statement and think that everything is fine and not check it. But, your card may have an auto payment option, and satellite radio, subscription services, and gym memberships may get deducted from it.

As you are unaware, the missed payment can affect you financially and can have an effect on your credit score too. 

Apart from this, here are the various things that can happen to your credit card if you will not use it for a long time:

  • After a long period of inactivity, your credit card issuer may opt to terminate your account. In most cases, they’ll notify you in advance and offer you an opportunity to use your card before they cancel it.
  • A period of inactivity on a credit card account may cause some points to expire. When your account is closed, you’ll also lose any awards you haven’t yet redeemed.
  • Interest will continue to collect on any outstanding balances on the card even if you no longer use it. You won’t be required to make any further payments once you’ve paid off all of your outstanding debt.
  • Even if you don’t use your credit card, you’ll still be responsible for the yearly cost. To be on the safe side, close any credit cards you’re paying for but receiving little or no use out of.

If I dont use my credit card will I be charged?

Interest is calculated on the outstanding balance. Therefore, if your balance is zero, then you cannot be charged interest.

Based on the amount of money you owe, you are charged interest. If you owe money and haven’t paid it off, you’ll be hit with interest. There is no interest to be paid if you do not owe any money on the credit card.

Even if you never use your credit card, you may still be charged an annual fee if the card has already disclosed the amount in advance. However, non-annual fee cards will not begin collecting an annual fee without first providing notice of change in terms.

Read Also: Does Billing Address Name Have to Match Credit Card Name?

If you don’t use your credit card does it affect your credit score?

Yes, your credit score will take a hit if you will not use your credit card. This is because five main factors determine a credit score: one of them is credit utilization. The credit utilization ratio measures how much you owe vs. how much credit you have available.

Even if you only use your credit cards for minor and unimportant transactions each month, it’s crucial to keep using them. 

Credit reporting agencies prefer to see that you can use your card responsibly, accumulate a small amount of debt, and then promptly pay it off. Maintaining and improving your credit score both depend heavily on making good use of your available revolving credit.

To understand, let’s take an example, You have a $10,000 credit line on one car & you use $1000 in a month. So your credit utilization is 10%.

Now, let’s assume you got two cards and you have a $5000 credit line on each card. You use $500 on each, so your credit line is still 10%. But if you close one card, the credit utilization will jump to 20%. 

Financial experts recommend a credit usage rate of 30 percent or less. 

So you should keep using a credit card to keep credit utilization under 30% and make credit score at the right numbers.

How often should I use my credit card to keep it active?

When it comes to lenders closing your account after a period of inactivity, there are no hard-and-fast industry norms or guidelines. If you plan to leave your credit card inactive for more than a month, check with your credit card company to learn about their policies to avoid unexpected account closure.

Mostly, credit card companies close the account after six months or one year. So before that period, either use the card & ask for the closure of the credit card. Keep in mind that closing a credit card will affect your credit score.

Alternatives to closing a credit card:

Because closing a credit card might have an influence on your credit score, you have options if you don’t use your card but are afraid to close it:

  • Call the issuer and ask to switch to a card from the same company that is better for you. You can ask for downgrading the card.
  • A minor recurring charge will keep the card open and prevent the issuer from canceling it because of inactivity. Autopay and calendar reminders are two options to consider.
  • Don’t forget to replace the credit limit on your unused card with the credit limit from a card you’d like to use. Then, close the credit card that you don’t use.

How Can You Keep Credit Cards Active?

If you want to keep your credit card active without hurting your credit score or avoiding fraudulent charges & transactions, then the best possible way is to make small purchases, like gas coffee, once a month. 

If you use the card too little or too much, you need to find a middle ground somewhere in between. One way to keep the card a little action is to charge it once or twice a month.

Set the card for a small recurring payment like a Netflix subscription or any utility bill. But don’t forget to pay back the amount and check the account every month. 

Bottom Line

If you do not use a credit card for a long time, it can finally hurt you and have an impact on your credit score. So the best way is to keep using the card for small payments. Moreover, you should avoid getting a credit card in the future, even if the offers are tempting if you already have one.

We hope you found this article helpful & informative. Please let us know your thoughts & suggestions in the comments below!

Thank you for reading!