By MyBankTracker  Updated on Thu Jul 17, 2014

What Happens When You Don’t Use Your Credit Card

 

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

What Happens When You Dont Use Your Credit CardWhat Happens to Unused Credit 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:

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Post a Comment

  • 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