If I Don’t Use a Credit Card, Will It Close?

Credit cards offer a convenient way to manage expenses and build a financial history. Many cardholders wonder if an unused credit card will close. Credit card issuers can indeed close accounts due to inactivity, and understanding this possibility is important.

The Likelihood of Account Closure

Credit card issuers frequently close accounts with prolonged inactivity. This helps them manage financial risk and reduces the administrative burden of dormant accounts. Inactivity typically ranges from several months to a few years, such as 6 to 24 months, though it varies among issuers.

Issuers also consider account profitability. An unused card generates no revenue from transaction fees or interest. By closing inactive accounts, issuers can reallocate available credit to customers more likely to generate revenue.

While inactivity is a primary reason, accounts can also close due to factors like late payments on other accounts with the same issuer or the discontinuation of a specific card product. Credit card companies are generally not required to provide advance notice before closing an account due to inactivity. While some may send an alert, it is not a universal practice. This means a cardholder might only discover their account has been closed when they attempt to use the card or receive a notification after the fact.

Understanding the Impact on Your Credit

A closed credit card account can influence a user’s credit score. The primary areas affected include the credit utilization ratio, the length of credit history, and the credit mix.

Closing an account reduces the total amount of available credit. If balances exist on other active cards, this reduction in overall credit can cause the credit utilization ratio to increase. This ratio, which compares the amount of credit used to the total available credit, is a significant component of credit scoring models, with lower ratios generally being more favorable. For example, if total available credit drops from $10,000 to $5,000 while a $2,000 balance remains, the utilization jumps from 20% to 40%, potentially lowering the score.

The length of credit history, also known as the average age of accounts, is another factor that can be affected. While a closed account in good standing typically remains on credit reports for up to 10 years and continues to contribute to the credit history, an older account’s eventual removal can shorten the average age of all accounts. This might negatively impact the score over time, as a longer history of responsible credit management is generally viewed positively by lenders. Credit mix, which refers to the diversity of credit types, can also be slightly altered, but this factor usually has a smaller impact on overall credit scores compared to utilization and payment history.

Strategies to Keep Accounts Open

Consumers can take steps to prevent their credit card accounts from being closed due to inactivity. Consistent, minimal use of the card is an effective strategy. Making a small, occasional purchase, such as a streaming service subscription or a small retail item, and then immediately paying it off, demonstrates activity to the issuer.

Setting up small, recurring payments, like a minor utility bill or a monthly subscription, to be automatically charged to the card can also maintain account activity. It is important to ensure that these payments are set to auto-pay in full from a bank account to avoid interest charges and maintain a positive payment history. Regularly reviewing account statements for any warnings or policy changes from the issuer is advisable. If an inactivity warning is received, contacting the credit card company to express interest in keeping the account open may prompt them to reconsider closure.

Managing a Closed Account

If a credit card account has closed due to inactivity, a cardholder can take several steps. First, verify the closure and ensure it is accurately reported on credit reports. Free access to credit reports is available annually from each of the three nationwide credit bureaus.

If a balance remains on the closed account, continue making payments as agreed. Failure to do so can lead to negative marks on the credit report, which can significantly impact credit scores. While a single closed account in good standing is generally not catastrophic for a credit score, exploring alternative credit options might be beneficial if the closure affects one’s credit profile or financial needs. If the closure was recent, contacting the issuer promptly to inquire about reinstatement may be an option, though success is not guaranteed.