You may be wondering and probably worried about what happens if you don't use your credit card for a long time. In fact, there are some glitches that can arise with this, such as dealing with credit card debt and more. To see everything that happens during this period, read on.
Submitting one or two credit cards to the sidelines can be a smart way to avoid debt. But leaving a credit card unused for an extended period comes with certain risks.
This move has two main drawbacks. They include:
Risks of not using a credit card
You may have been told that the best way to get out of debt is to hide your credit card so you can't access it when you're tempted to make spontaneous purchases. But what happens if you don't use a credit card?
You may have even heard that you should cut your card into small pieces, ensuring that you never use it again. If you regularly charge more than you can afford, both ideas may seem attractive, especially if your credit card is not charged an annual fee.
Credit card debt is terrible and should be avoided. However, if you do not use your card at all, you run the risk of having it canceled due to inactivity. You can also expose yourself to an increased risk of credit card fraud and accidental missed payments.
What happens to an unused credit card
1. Your account may be closed
One of the risks when the card remains inactive is that your lender might decide to close the account. Lenders choose to close accounts for a variety of reasons. One possibility might be that if you don’t use an account at all and they don’t know what your income situation is, the lack of information could be considered a risk for them.
If you choose not to use your card for an extended period, it usually won't hurt your credit score. However, if the lender notices this period of inactivity and decides to close the account, it could lower your account.
This is because the loss of the source of credit affects the loan utilization rate. A measure of how much credit you are using compared to your total available credit.
2. You may not have noticed the actions with the cards
Ask yourself what is the likelihood that you will be checking the monthly statement associated with a card you are not using. If the answer is “not very big,” you may be missing out on fraudulent payments.
In the year 1652,572, there were 2021 41.8 identity theft cases reported in the United States. Unfortunately, XNUMX% of these were related to credit card fraud.
If you've never been a victim of a scam, you may not realize that attackers sometimes take your credit card number for a “trial run” when buying something small. If this crime is not reported, they know it is safe to make larger purchases.
It's also easy to miss other charges that appear and accidentally miss a payment. These include annual credit card fees and irregular payments for things like satellite radio, subscription services, and gym membership. Missed payments lead to late fees and damage your credit score.
3. You can miss fraudulent payments on your card.
If you haven't used your card in a certain month, you might be tempted to just assume everything is ok and not look at your report.
But it can leave you vulnerable to ignoring any fraudulent accusations that may go unnoticed for weeks or months. It would be a good idea to go online or the map app to make sure nothing looks suspicious.
If you do not know about unauthorized charges, then not using the card can ultimately damage your credit.
4. Your card may be canceled
Credit card companies may close your account if you never use your card. Closing a credit card account can negatively affect your credit score, even if you didn't intend to close it.
Especially if you have the longest card.
Closing it due to inaction can lead to a drop in your credit score. Additionally, canceling your credit card will make it impossible for you to use it in emergencies and for things like hotel and car rentals, which often require a credit card.
Is it worth canceling a card that you don't use often?
The point is, you sometimes need to use a credit card to keep it alive. How often it should be pulled out is a matter of personal opinion.
Just in case, try to charge at least one item per month and pay for it. Even if it's just a gallon of milk, the event will show up as a timely payment. Moreover, the credit card company will treat the card as active.
The ideal way to use any credit card is to buy what you need. You can also get valuable rewards and never carry over your balance to the next month.
No matter what your current situation is, you don't need to stop using your credit card. Instead, you need to make it work for you, not the other way around.
Was this helpful? If yes! Please leave your comment. For more articles on the topic, subscribe to our forum.
Submitting one or two credit cards to the sidelines can be a smart way to avoid debt. But leaving a credit card unused for an extended period comes with certain risks.
This move has two main drawbacks. They include:
- the creditor can close the account, and
- you may be susceptible to fraud if you do not vigilantly check an inactive card.
Risks of not using a credit card
You may have been told that the best way to get out of debt is to hide your credit card so you can't access it when you're tempted to make spontaneous purchases. But what happens if you don't use a credit card?
You may have even heard that you should cut your card into small pieces, ensuring that you never use it again. If you regularly charge more than you can afford, both ideas may seem attractive, especially if your credit card is not charged an annual fee.
Credit card debt is terrible and should be avoided. However, if you do not use your card at all, you run the risk of having it canceled due to inactivity. You can also expose yourself to an increased risk of credit card fraud and accidental missed payments.
What happens to an unused credit card
1. Your account may be closed
One of the risks when the card remains inactive is that your lender might decide to close the account. Lenders choose to close accounts for a variety of reasons. One possibility might be that if you don’t use an account at all and they don’t know what your income situation is, the lack of information could be considered a risk for them.
If you choose not to use your card for an extended period, it usually won't hurt your credit score. However, if the lender notices this period of inactivity and decides to close the account, it could lower your account.
This is because the loss of the source of credit affects the loan utilization rate. A measure of how much credit you are using compared to your total available credit.
2. You may not have noticed the actions with the cards
Ask yourself what is the likelihood that you will be checking the monthly statement associated with a card you are not using. If the answer is “not very big,” you may be missing out on fraudulent payments.
In the year 1652,572, there were 2021 41.8 identity theft cases reported in the United States. Unfortunately, XNUMX% of these were related to credit card fraud.
If you've never been a victim of a scam, you may not realize that attackers sometimes take your credit card number for a “trial run” when buying something small. If this crime is not reported, they know it is safe to make larger purchases.
It's also easy to miss other charges that appear and accidentally miss a payment. These include annual credit card fees and irregular payments for things like satellite radio, subscription services, and gym membership. Missed payments lead to late fees and damage your credit score.
3. You can miss fraudulent payments on your card.
If you haven't used your card in a certain month, you might be tempted to just assume everything is ok and not look at your report.
But it can leave you vulnerable to ignoring any fraudulent accusations that may go unnoticed for weeks or months. It would be a good idea to go online or the map app to make sure nothing looks suspicious.
If you do not know about unauthorized charges, then not using the card can ultimately damage your credit.
4. Your card may be canceled
Credit card companies may close your account if you never use your card. Closing a credit card account can negatively affect your credit score, even if you didn't intend to close it.
Especially if you have the longest card.
Closing it due to inaction can lead to a drop in your credit score. Additionally, canceling your credit card will make it impossible for you to use it in emergencies and for things like hotel and car rentals, which often require a credit card.
Is it worth canceling a card that you don't use often?
The point is, you sometimes need to use a credit card to keep it alive. How often it should be pulled out is a matter of personal opinion.
Just in case, try to charge at least one item per month and pay for it. Even if it's just a gallon of milk, the event will show up as a timely payment. Moreover, the credit card company will treat the card as active.
The ideal way to use any credit card is to buy what you need. You can also get valuable rewards and never carry over your balance to the next month.
No matter what your current situation is, you don't need to stop using your credit card. Instead, you need to make it work for you, not the other way around.
Was this helpful? If yes! Please leave your comment. For more articles on the topic, subscribe to our forum.
