Ever wondered about the consequences of letting your credit card gather dust in your wallet? While it might seem harmless, neglecting your credit card can have surprising repercussions.
Impact on your credit score
Your credit score is a vital indicator of your financial reliability. Surprisingly, not using your credit card can negatively impact this score. Credit bureaus in India, such as CIBIL, Equifax, and Experian, consider your credit utilisation ratio when calculating your score. This ratio compares your credit card balance to your credit limit.
When you don't use your card, your credit utilisation ratio drops to zero. While this might seem positive, it actually sends a signal to lenders that you're not actively managing credit. As a result, your credit score may decline over time, potentially affecting your ability to secure loans or favourable interest rates in the future.
Potential fees and account closure
Inactive credit cards can lead to unexpected financial pitfalls. Many banks in India impose inactivity fees on cards that haven't been used for an extended period, typically ranging from 3 to 12 months. These fees can accumulate silently, catching you off guard when you finally check your statement.
Moreover, prolonged inactivity may prompt your bank to close your account without notice. This can be particularly problematic if it's your oldest credit card, as the length of your credit history contributes significantly to your overall credit score. Losing this account could result in a sudden drop in your score, impacting your creditworthiness.
Tips for keeping your credit card active
To avoid the pitfalls of an inactive credit card, consider these practical tips:
- Set up automatic payments: Link your credit card to recurring bills like utilities or subscriptions. This ensures regular activity without requiring much effort on your part.
- Use it for small, routine purchases: Make a habit of using your card for everyday expenses like groceries or fuel. This keeps the account active while allowing you to pay off the balance easily.
- Set calendar reminders: Create monthly alerts to remind you to make at least one small purchase on your card. This simple step can prevent inactivity fees and potential account closure.
- Rotate your cards: If you have multiple credit cards, establish a system to use each one regularly. This maintains activity across all your accounts and helps manage your credit utilisation ratio.
- Online subscriptions: Use your card for streaming services or other digital subscriptions. These recurring charges keep your account active without the risk of overspending.
- Annual purchases: Designate your card for specific annual expenses, such as insurance premiums or membership renewals. This ensures at least one significant transaction per year.
- Mobile wallet integration: Add your credit card to your smartphone's digital wallet. This makes it convenient to use for contactless payments, encouraging more frequent use.
- Travel expenses: Reserve your card for travel-related costs like flight bookings or hotel reservations. This not only keeps the card active but also takes advantage of travel-related perks many cards offer.
- Emergency fund: Designate your credit card as part of your emergency financial plan. While it's best not to rely on credit for emergencies, having an active card can provide peace of mind.
- Regular account review: Schedule quarterly reviews of your credit card account. This habit helps you stay aware of any changes in terms, fees, or rewards programs.
While maintaining an active credit card is crucial, choosing the right card can make this task enjoyable and rewarding. Bajaj Finserv RBL Bank Credit Cards offer a range of features that encourage regular use while providing substantial benefits.
Bajaj Finserv RBL Bank Credit Card benefits
Earn redeemable reward points with every transaction, and watch your rewards soar with accelerated earnings on online and international purchases. Enjoy the convenience of dedicated concierge services for assistance with reservations for travel and dining, among other things.
Unlock a world of savings with exclusive discounts and cashback offers across a wide range of categories. Get off to a flying start with a generous sign-up bonus of up to 4,000 reward points. Bid farewell to fuel surcharges, as we offer waivers of up to Rs. 1,200 annually, ensuring your journeys are more cost-effective.
Elevate your travel experience with complimentary access to airport lounges, where you can unwind in comfort before your flights. Manage your finances with ease, as you qualify for annual fee waivers by meeting our spending thresholds. Embrace the flexibility to convert large purchases above Rs. 2,500 into convenient EMIs, and enjoy up to 50 days of interest-free cash withdrawals from ATMs.
Indulge in entertainment perks, including monthly discounts and 'buy 1, get 1' offers on BookMyShow movie tickets. Every transaction is a step towards a more rewarding lifestyle with this co-branded credit card.
The Bajaj Finserv RBL Bank Credit Card transforms the task of keeping your card active into an opportunity for rewards and savings. Its diverse benefits cater to various lifestyles and spending habits, making it an excellent choice for those looking to maintain an active credit profile while enjoying valuable perks. So, why wait? Apply today!
