Most Americans only have one or two credit cards, according to The Ascent's recent credit card survey. But there's a substantial minority who hold onto four or more cards. When you have that many, it's possible that you may not use them all each month.
Charging nothing to a credit card for a month or two probably won't change anything for you, but if you go several months without using a card, you can expect the issuer to take notice. Here's what could happen.
Kiss your credit card goodbye
Most credit card issuers will overlook a few months of inactivity, but if you go six months to a year without charging a single item to your card, the issuer will likely cancel it for you. Each company sets its own rules for how long it will wait before it cancels an inactive card. If you have any questions about the rules for your card, you can always reach out to the issuer and ask.
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If the company doesn't close the account altogether, it could lower your credit limit. You may be able to reverse this by reaching out to the company and asking it to restore your previous limit, but this is up to the credit card company's discretion.
Your credit could be affected
A reduced credit limit or closed credit card will affect your credit score -- specifically, your credit utilization ratio. This is the ratio between the amount of credit you have available to you and the amount you use every month. For example, if you have a card with a $10,000 limit and you charge about $2,000 to the card, your credit utilization ratio for that card is 20%.
Ideally, you want a credit utilization ratio that's above zero, but less than 30%. This shows that you've borrowed money in the past and have been able to pay it back without too much difficulty. A higher credit utilization ratio indicates that you might be living beyond your means. That's why it reduces your credit score.
When you close a credit card on your own or the bank does it for you, your credit utilization ratio automatically goes up because you now have less available credit. It's not unusual to see your credit score take a dip in this situation, but it may not be the end of the world.
Sometimes, closing a credit card can be a smart move. For example, if the card charges an annual fee that's costing you more than you earn in rewards, it probably doesn't make sense to hold onto it. Closing it might cause a temporary drop to your credit score, but as long as you don't close any other cards for at least six months and your overall credit utilization ratio remains under 30%, it probably won't affect you too much.
How to stop your credit score from taking a hit
You may not be able to stop your credit score from dropping following an inactive credit card closure. But there might be some things you can do to ensure that this doesn't hurt your credit score too badly.
First, review your credit utilization ratio across all your other cards. Take a look at your ratio on each card individually as well as overall. Whenever possible, try to ensure that this remains under 30%. If it's not, you may have to charge more to certain cards and less to others or reduce how much you put on your credit cards overall.
Another way to reduce your credit utilization ratio is to pay your bill twice per month. The credit card companies only report your balance to the credit bureaus once per month. So making a payment halfway through the month and again at the end makes it appear as if you only charged about half as much as you actually did to your card that month.
You could also see about increasing your available credit by either opening a new credit card or raising the limits on your current credit cards. But you should only do this if you feel fairly confident that you'll be approved. When applying for new credit, lenders do a hard inquiry on your report, which also drops your score by a few points. But this won't matter if you're approved for a higher limit and your credit utilization ratio drops significantly.
And if you'd like to avoid this whole issue altogether, make sure you charge a few small items to each of your credit cards at least every few months. This could prevent your card issuer from canceling your account or reducing your available credit in the first place.
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FAQs
The bottom line. Credit card inactivity will eventually result in your account being closed. A closed account can have a negative impact on your credit score, so consider keeping your cards open and active whenever possible.
What happens if I don't use my credit card for a few months? ›
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
How many months can you go without using a credit card? ›
Kiss your credit card goodbye
Most credit card issuers will overlook a few months of inactivity, but if you go six months to a year without charging a single item to your card, the issuer will likely cancel it for you. Each company sets its own rules for how long it will wait before it cancels an inactive card.
How long can a credit card go without being used? ›
If you don't use a credit card for a year or more, the issuer may decide to close the account. In fact, inactivity is one of the most common reasons for account cancellations. When your account is idle, the card issuer makes no money from transaction fees paid by merchants or from interest if you carry a balance.
What happens to a credit card if you never use it? ›
Credit card issuers may lower your credit limit due to inactivity before closing. Credit card issuers don't need to give you a notice about your closure due to inactivity — they can do this at any time. If your issuer closes your card due to inactivity, your credit score could decrease for a few reasons.
Is it better to close a credit card or let it go inactive? ›
In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.
Is it bad to cancel a credit card you never use? ›
Credit experts advise against closing credit cards, even when you're not using them, for good reason.
Can a credit card company close your account due to inactivity? ›
Credit card issuers can close your account due to what's known as "inactivity," meaning you haven't used the card in a certain amount of time — let's say a year or more — and the issuer now assumes you have no use for that account.
Is inactivity on a credit card bad? ›
Credit card inactivity will eventually result in your account being closed. A closed account can have a negative impact on your credit score, so consider keeping your cards open and active whenever possible.
Is it bad to close a credit card with zero balance? ›
Your credit utilization ratio goes up
By closing a credit card account with zero balance, you're removing all of that card's available balance from the ratio, in turn, increasing your utilization percentage. The higher your balance-to-limit ratio, the more it can hurt your credit.
Even if you don't use a credit card, the card issuer may still continue to levy annual fees and charges. An inactive credit card could be deactivated by the card issuer. A credit card could be helpful for those who are looking forward to convenience of payment and often face cash crunch.
Does it hurt your credit to not use a credit card? ›
Bottom Line. If you don't use a particular credit card, you won't see an impact on your credit score as long as the card stays open. But the consequences to inactive credit card accounts could have an unwanted effect if the bank decides to close your card.
Do I have to use my credit card every month? ›
While you don't want to carry any balance, make sure you're still using your credit card regularly — at least on small charges. Otherwise, your credit card issuer can potentially close your account after months or years of inactivity.
Is it bad to close a credit card you just opened? ›
It may cause your credit score to drop temporarily. But, don't panic. By making timely payments on your other accounts, and lowering your credit utilisation ratio, you can rebuild your credit score. However, it's highly recommended that you wait for at least six months before applying for your next credit card.
Should you keep credit cards at zero balance? ›
An active card can help your credit, but a zero balance is best for your score. June 6, 2024, at 12:06 p.m. Not paying your credit card balance in full will negatively impact your credit score and force you to pay interest.
Do credit cards expire if not used? ›
In general, this is after 12+ months of inactivity. Some issuers have a much longer grace period of up to several years. So if you have an old credit card that you never use, it's possible that the issuer may close it. This is different from a standard expiration, as the credit account will actually be closed.
What happens if I don't pay my credit card for 6 months? ›
But generally, if you don't pay your credit card bill, you can expect that your credit scores will suffer, you'll incur charges such as late fees and a higher penalty interest rate, and your account may be closed. And the longer it takes for you to pay that bill, the worse the effects may be.
What happens if credit card is not used for long time? ›
Usually, when the duration of inactivity crosses a certain period, the credit card is deactivated by the card issuer. However, the duration of dormancy for formal deactivation differs depending on the card issuer. While some issuers deactivate a card after six months of dormancy, some wait for at least for a year.
