That unused credit card might seem like an innocent piece of plastic taking up the third slot in your wallet, but what happens when you don’t use your credit card? In reality it could be lowering your credit score and causing other problems with your account you might not even be aware of.

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Do you keep your credit cards active? Tip: Link your unused cards to a subscription each month, like Netflix or your cable bill. Image via Shutterstock

What happens to unused cards

If your account goes through a long period of inactivity, your card issuer could close your line of credit without warning. A closed account will result in less credit for you and could lower your credit score due to the way FICO scores are calculated.

The FICO score looks at how much credit you have available in contrast with how much you are using, meaning a closed card could decrease your available credit and increase the ratio of available credit you are using. This disproportionate balance could harm your credit score.

The reason your inactive account is in danger of being canceled without your approval is because credit card issuers lose money on dormant accounts and usually cut lines of credit after they have been unused for one year or longer.

Thanks to the CARD Act, banks are not allowed to charge inactivity fees on unused accounts. This saves you the trouble of being charged on accounts they have forgotten or have just been neglecting.

Holding multiple credit cards

The advantages and disadvantages that come with owning multiple credit cards can depend a lot on your preferences and habits as a cardholder.

The main advantages include:

– Flexibility when paying at merchants that don’t accept all card carriers.
– Holding multiple credit cards will build a stronger credit rating.
– A variety of rewards programs and cash back incentives.

Disadvantages of owning multiple credit cards:

– It is more difficult to keep track of bills and payments for multiple accounts.

– Users of multiple cards are more likely to run up debts that can turn into unmanageable amounts. Which means your credit rating is at a greater risk of taking a hit.
– The closing of credit cards due to inactivity can harm your credit rating.

Learn how to avoid credit card debt.

Have you had any issues with inactive credit cards? Let us know in the comments:

Ask a Question

  • Ang

    Have you had any issues with inactive credit cards? Yes, just yesterday I shopped at Saks Fifth Ave, forgot my card so they looked me up but the account wouldn’t work. After the store calling customer service we discovered that it had been dropped out of the system due to lack of use. This was most embarrassing and probably hurt my credit score as well. Stores should alert you if they are going to cancel you out. Thanks!

  • guev

    target sent me a letter saying they will close my account in 45 days if i dont use it and lowered my credit line from 5k to $200

  • Samantha

    Saks Fifth Avenue credit card got my credit score reduced by 6 points for not having a balance and not using my card in over 4 months. Im wondering if its better to close it or keep it. Will it keep hurting my score if I dont use it or will it stop reporting that?

  • Gt smith

    Yes I have that problem of being not using my credit card without knowing that if I am not using my cc that could cause me lowering my credit score because when the credit card or when the shop sale the credit card they never explain to me any of these things about not using the cc

  • Andrew

    The first question is, how much did my credit go up when opening the new credit card? Depending on how much it decreases due to inactivity will determine whether or not I would keep their card. Also, what is or is there an additional hit on your credit for closing the account?

    • Andrew, your credit typically drops a little when you apply for a new credit card because it triggers a hard credit inquiry and your average age of accounts will drop. Over time, the average age will improve while your increased total credit limits will reduce your debt-utilization ratio (assuming your balances don’t rise drastically).

      Credit scores don’t actually drop due to inactivity. However, credit scores will drop if card issuers decide to reduce your credit limits and/or close your account due to inactivity.

      Whether you close your account or the card issuer closes your account, credit bureaus see that the account has stopped aging (which will reduce the growth of your ‘average age of accounts’ = credit score increases more slowly) and the closed-card’s credit limit is gone (thus increasing your debt-utilization ratio = credit score drops).