What if a credit card sits in your wallet, unused, for months or even years?
If you don’t use your credit card for a long time, the issuer may close the account due to inactivity.
Let’s look at what happens when you don’t use your credit card, how account closure can affect your creditworthiness and strategies to keep your account open.
Account closure
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 account closure.
Sometimes if you don’t use your credit card for a long period, your issuer may close the account. There’s no set amount of time for this – how long the card can remain inactive before it’s closed 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, this is an opportunity to use the card if you want to keep the account open.
Effects of account closure on creditworthiness
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. When an account closes, 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 over time.
Length of credit history
How long you’ve had your active credit accounts contributes to your creditworthiness.
Closing an older account can negatively impact the average age of your accounts. The age of your oldest account can also affect your creditworthiness. So, if this is your oldest card, letting it close can have an impact on 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 one card close might not affect your credit mix much. However, if this is your only credit card, or if you don’t have very many credit accounts, 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 using it and making on-time payments:
Make small, regular purchases
Use your card for everyday essentials like groceries or a weekly coffee purchase. These transactions 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 ensure your card is used regularly with minimal effort.
Set up automatic payments
You may have stopped using a card because it’s hard to keep track of multiple credit card bills. Setting up automatic payments may reduce the risk of forgetting a due date, which may help you maintain a positive payment history.
Monitor statements
Keeping tabs on your monthly credit card statements is a good practice regardless of activity level. Regularly reviewing your transactions, especially on an account you’re not using very often, may help you spot unauthorized charges.
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.
