How Often Do You Have to Use a Credit Card to Keep It Open?

Credit card accounts are dynamic financial tools that require periodic engagement to remain active. While consumers often focus on managing debt and making timely payments, consistent usage is also a significant aspect of responsible credit management. Credit card issuers continuously monitor account activity, and a lack of transactions can lead to unexpected account closures.

Understanding Account Inactivity and Closure

Credit card issuers close inactive accounts for several financial and operational reasons. A primary concern is risk management, as an unused credit line could be exploited or incur significant debt. Credit card companies also generate revenue through transaction fees paid by merchants. If an account remains idle, the issuer earns no income, making it unprofitable. Issuers have finite credit to extend, and unused lines tie up capital that could be allocated to active cardholders.

“Inactivity” refers to a sustained lack of new transactions or purchases on the account. Accounts that sit dormant can be flagged for review and potential closure, even if they have a zero balance. Financial institutions aim to optimize their lending portfolios.

Defining Active Use

Active use of a credit card typically involves any transaction that draws upon the credit line. The most common form is making a purchase, regardless of the amount. Even a small purchase, such as a pack of gum or a cup of coffee, is sufficient to register activity. Setting up a small recurring bill payment, like a streaming service subscription or a utility bill, on the card is another effective method to demonstrate consistent use.

Other actions that count as active use include balance transfers, which involve moving debt from one credit card to another. Conversely, activities that do not involve a transaction on the credit line do not count as active use. Checking an account balance online, making a payment to the credit card, or simply logging into the online banking portal are not considered active usage by card issuers.

General Guidelines for Use Frequency

There is no universal rule dictating precisely how often a credit card must be used to prevent closure, as policies vary significantly among different issuers and card products. However, common timeframes that often trigger a review for inactivity range from six months to 24 months. Some financial experts suggest making at least one purchase every three to six months to be safe.

Issuers are not always required to provide advance notice before closing an inactive account. While some may send a warning, others may close the account without direct communication. To obtain precise information, cardholders should consult their specific cardholder agreement or contact their credit card issuer directly to understand their inactivity policies.

Impact of Account Closure

The closure of a credit card account, particularly due to inactivity, can have several implications for a cardholder’s financial profile. A significant impact relates to the credit utilization ratio. When an account is closed, total available credit decreases, which can cause the utilization ratio to rise, potentially negatively affecting credit scores. Financial guidance recommends keeping this ratio below 30% to maintain a healthy credit score.

Account closure can also affect the average age of accounts. If an older account is closed, especially one that contributes significantly to the length of a cardholder’s credit history, it could shorten the overall average age, which may also impact credit scores. Accounts closed in good standing remain on a credit report for up to ten years, but their eventual removal reduces total credit history length. Cardholders may also lose accumulated rewards or other benefits associated with the closed card, and face the inconvenience of losing an established credit line.

Strategies to Maintain Account Activity

Maintaining credit card activity does not require significant spending or frequent use. One practical strategy is to set up a small, recurring payment, such as a monthly streaming service subscription or a minor utility bill, to be automatically charged to the card. This ensures consistent activity without requiring active management each month. Another simple method involves making a small, occasional purchase with the card, such as buying a coffee or a tank of gas, and then immediately paying off the balance to avoid interest charges.

Cardholders can also rotate their usage among different cards, ensuring each card registers activity every few months. Setting digital reminders can help manage which cards need to be used and when. These straightforward actions help keep accounts in good standing and prevent them from being flagged for inactivity.