What happens if your credit card account becomes inactive?
It’s fine if you don’t use your credit card for a little while, but for some credit cards, prolonged inactivity may lead to a reduced credit limit or even an account closure.
There’s no set amount of time after which a credit card account is considered inactive — that can differ by card and issuer.
Your issuer may or may not notify you that they’re about to close your account. If they do notify you, that’s an opportunity to use the card if you want to keep the account open.
How account closures can impact credit
If your credit account is closed, it could affect your creditworthiness. Here’s how:
Credit utilization
Your credit utilization ratio measures how much of your available credit you’re using. For example, if you have a single credit card with a $10,000 limit and you carry a $1,000 balance, your utilization would be 10%.
When an account closes or your credit limit decreases, the total credit limit across all your cards decreases, which could increase your utilization ratio even if your spending habits haven’t changed. A higher utilization ratio can lower your credit score.
Length of credit history
Your credit score factors in the length of your credit history, including the average age of your accounts and your oldest account. That means closing an older account can shorten your average credit history and negatively impact your credit score.
Credit mix
Your credit mix refers to the different types of credit accounts you have. If you have several credit cards and other types of debt (like a mortgage and student loans) letting a single card close might not affect your credit mix much. However, if this is your only credit card, letting it close could have a bigger impact.
Strategies to keep your credit card active
Fortunately, you don’t have to use your card all the time to keep it active. Here are some strategies for keeping your account active and in good standing:
Make small, regular purchases
Using your card for everyday essentials, like groceries or a weekly coffee purchase, can help you keep your account active without increasing your spending.
Use the card for a recurring payment
Automating a small recurring expense, such as a streaming subscription service, can also ensure your card is used regularly with minimal effort. This strategy can be especially useful when paired with automatic payments.
Monitor statements
Keeping tabs on your monthly credit card statements is a good practice regardless of activity level. That said, regularly reviewing your transactions, especially on an account you’re not using very often, may help you both spot unauthorized charges and ensure you don’t go too long without using a card.
When should I close my unused credit card?
Sometimes, it may make sense to close a credit card. The key is ensuring that the benefits of doing so outweigh the drawbacks. For example, if you have a card with a high annual fee and you don’t get enough value out of the card’s features, closing that account may be preferable, even if it means a credit score dip. Keep in mind, however, that issuers may be willing to downgrade your card rather than closing your account.
Unused credit cards: FAQs
Can I be charged a fee for having an inactive credit card?
No. You generally cannot be charged a fee if you simply stop using your credit card for a prolonged period. However, annual fees are charged regardless of inactivity.
Can an issuer close a credit card account if I carry a balance?
In general, your issuer won’t consider your account inactive if you’re carrying a balance, so they won’t close that account due to inactivity.
What steps should I take before closing an unused credit card?
If you determine that closing an unused credit card makes sense, it’s generally a good idea to wait for all pending charges to clear, pay off your balance and use or transfer any earned rewards. Then you can contact your issuer to close the account.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
