It is not unusual for credit card holders to receive a new credit card due to rewards, discounts, or unexpected events—and then not use it for months on end. While there is no regulation forcing cardholders to frequently use a credit card, not using a card over a long time can be an issue. Closing an account, reducing your credit score, are some of the subtle dangers that unused cards pose, which many consumers, especially new card holders and occasional users, just overlook.
Credit card issuers don't need to keep an account open indefinitely, and according to their internal policy, they may flag dormant accounts after a few months and subsequently close them if no further use is made.
Here's what you need to know about how long you can remain inactive on a card, what will occur if you don't make use of it, and how to maintain your credit wellness.
What is an inactive credit card?
A credit card expires if there are no purchases within a particular period. This period varies with the issuer but is usually between six months and one year. Even with zero balance and no outstanding fees in your account, inactivity may trigger internal reviews, which will eventually result in closing of the account.
Credit card issuers review account activity in order to control risk and profitability. If the cardholder is not utilizing the credit line provided, the issuer can opt to close the card as a way to decrease unused credit lines or curb fraud exposure potential.
How long prior to closing a card for inactivity?
Few foreign and Indian credit card issuers give a strict time frame for account closure based on inactivity, but anecdata and customer experience reports show that cards are closed off as early as six months after the last use. In some cases, issuers send an email or SMS notification before closing the account, but this is not always the case.
Once a card is closed, the credit limit on the card no longer contributes towards your overall credit availability. This can counteract your credit utilisation ratio—a significant portion of your credit score—and lower your overall credit history length, specifically if the card is one of your oldest accounts.
What are the risks of letting a card go inactive?
The biggest risk is involuntary account closure, which harms your credit score twice: by reducing your overall available credit and by reducing your average credit age. Both of these are major factors used to determine creditworthiness. As another risk, if the card does have an annual fee, you'll be charged whether you use it or not—and neglecting to pay will penalize your score, too.
There is also security risk. If a sleeping card is hacked and fraudulently charged without being detected because you're not keeping it in close surveillance, the financial loss could be harder to contain. Most consumers who maintain sleeping cards do not review statements regularly, hence delayed fraud presents a higher risk.
How to keep your card active without overspending
Experts suggest making occasional small purchases—such as a periodic streaming subscription or a periodic bill payment—to keep the card live. Payment of the balance in full before the payment due date saves you from paying interest while keeping your account live.
If you are concerned about losing track of too many cards, place reminders on your calendar or use a money tracking app. Additionally, make sure that you keep your contact information up-to-date with the card issuer so that you do not miss any notifications of potential closure.
While carrying a credit card as an emergency or one-time use reserve is fine, letting it just sit idle for too long of time fosters unnecessary financial risk. To protect your credit score and your right to draw on your line of credit, it is good practice to use the card periodically, at least once every few months. A small, manageable purchase with timely payment is often enough to keep the account active and in good standing.
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