Have you ever thought about what would happen if I didn’t use my credit card?
Let’s say you got a new credit card with a great introductory offer, but you didn’t use it after you got your reward. What happens after that?
If you don’t use your credit card, your account may be closed by the card issuer. If you are not vigilant about investigating the inactive card, you are also more vulnerable to fraud, and fraudulent charges can affect your credit rating and funds.
While nothing happens if you don’t use your credit card for a month, you should consider closing a record if you plan to keep it inactive indefinitely.
At the end of the day, credit card debt is terrible, and avoiding it is brilliant. However, not using your credit cards at all can have consequences that should be considered before locking up your cards.
WHAT HAPPENS IF I DO NOT USE MY CREDIT CARD? – THE RISK OF A CLOSED ACCOUNT
Another danger of inactive cards is that the issuer may decide to close the account.
If you haven’t used a credit card in a long time, it won’t hurt your credit score. If a lender notices your inactivity and decides to close your account, your credit score may suffer.
That’s because losing a line of credit has an impact on your credit utilisation ratio, which is a measurement of how much credit you use compared to your total credit limit.
If the card is one of your oldest credit accounts, it can reduce the age of your credit history, lowering your credit score by lowering the average age of the accounts on your report.
Another consequence of closing an account is that any accumulated rewards, such as airline miles, may be lost.
• Your credit card may be revoked.
Credit card companies make money from credit cards in a variety of ways, including annual fees, premium fees, and late fees. The handling fees that card backers charge dealers each time you swipe, however, are the main source of revenue for them.
Unused credit cards do not generate revenue, and maintaining and monitoring an open credit card account costs money. The most well-known consequence of releasing your unused credit card is that the card guarantor essentially drops your unused credit card and closes the record.
There is no hard and fast rule regarding how long a credit card company will keep your unused credit card on ice. They do not always decide when everything is fine, but they are not required by law to give you notice.
While it may seem insignificant if your guarantor drops a card you’re not using, a dropped card can harm your credit score in several ways:
It’s possible that your credit utilisation ratio will rise. This is the second most important factor in determining your credit score, and it compares the amount you owe to the amount of credit you have available. Your credit card history will no longer be updated.
The length of your credit history, which includes both the age of your oldest account and the average age of your records in general, is a significant factor in your credit score. While a closed credit account does not immediately disappear from your credit report, it does stop maturing.
This may cause your average record age to decrease, especially if the dropped card is one of your more established accounts.
Although it is not guaranteed that an unused credit card will be cancelled, it is a common practise to close non-dynamic credit cards.
Unless you’re certain the closed card won’t cause an issue or you’re paying a yearly fee for a card you’re not using, try to use all of your credit cards in some capacity on a regular basis to keep your records up to date and your payment history fresh.
• It’s possible that you’ll overlook card activity.
You’re thinking to yourself, “What if I don’t use my credit card?” at the same time. Consider the following scenario: “What happens to my unused credit card while I’m not looking?” You might not be logging into your account on a regular basis if you don’t use a credit card. This allows credit card fraud to flourish.
In 2019, 650,572 cases of identity theft were reported in the United States, with 41.8 percent of those cases involving credit card fraud. If you’ve never been a victim of fraud, you may not realise that the bad guys will sometimes purchase something small to “test” your credit card number. They know it’s safe to make larger purchases if the crime isn’t reported.
It’s also easy to overlook other charges that pop up and miss a payment. Annual credit card fees and irregular payments for satellite radio, subscription services, and gym memberships are examples of these.
Late fees and damage to your credit score result from missed payments. Even if you don’t use your credit cards frequently, keep an eye on your statements just in case.
• Ignoring Fraudulent Behavior
The most dangerous risk of not using a card is that you will stop paying attention to your bills as well. Failure to monitor your account could result in you being unaware of fraudulent activity. If you put your card out of sight and mind, you might not notice a fraudulent charge until it’s too late.
• Make your card useful to you.
The truth is that you will almost always have to use a credit card to keep it alive. It’s up to you how often you should use it, but making a small purchase every few months can help keep an otherwise unused credit card account from being closed.
It will also motivate you to review your statements on a monthly basis, making it easier to spot fraud or recurring charges.
The best way to use a credit card is to buy only what you need, earn valuable rewards, and never carry a balance over to the next month. You probably don’t need to stop using your credit card, regardless of your current situation. You must instead make it work for you, not the other way around.
Do you have to pay a fee if you don’t use a credit card?
In the past, credit card issuers could charge inactivity fees if you didn’t use your card for an extended period of time. The Federal Reserve, on the other hand, outlawed this practise in 2010.
If the card has an annual fee, you must pay it regardless of whether you use it or not.
CAN YOU GO FOR A LONG TIME WITHOUT USING A CREDIT CARD?
After a period of inactivity, there are no hard-and-fast industry rules or standards for when – or even if – a lender will close your account. You shouldn’t be concerned if you leave your credit card unused for a month or so, but if you want to avoid a surprise account closure, you should inquire about your credit card issuer’s policy.
HOW CAN CREDIT CARDS BE KEEPED ACTIVE?
If you want to keep your card account active, use it occasionally and check your statements for fraudulent charges every month. The key is to strike a balance between using the card infrequently and excessively.
Making a single, regular charge on the card is one way to keep it modestly active.
Thank you for taking the time to read this article about What Happens If I Don’t Use My Credit Card. Furthermore, not using your credit cards at all can have negative consequences that should be considered before locking your cards away.