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

A common concern among cardholders, however, is the potential for their credit card accounts to be closed by the issuer, particularly if the card remains unused. Credit card issuers do sometimes close inactive accounts, and understanding the reasons behind such actions can help consumers proactively manage their credit.

Why Credit Card Accounts Close

Credit card companies may close accounts for several reasons, with inactivity being a frequent cause. When a credit card remains unused, the issuer does not generate revenue from transaction fees or interest charges. This lack of profitability for dormant accounts, combined with the costs associated with maintaining them and regulatory requirements for active review, can lead issuers to close them. The definition of “inactivity” and the timeframe before closure can vary significantly among issuers, ranging from six months to two or three years. Some issuers might provide a warning before closure, but they are not always obligated to do so.

Beyond inactivity, other factors can prompt account closure. Consistent late payments or a significant decline in a cardholder’s credit score can signal increased risk to the issuer. Furthermore, a credit card product might be discontinued, leading to the closure of all associated accounts. Occasionally, a cardholder may also request to close their own account.

Impact of Account Closure

Closing a credit card account can affect a consumer’s financial profile, particularly their credit score. One significant impact relates to the credit utilization ratio, which is the amount of credit being used compared to the total available credit. When an account closes, the total available credit decreases, which can cause this ratio to increase if balances on other cards remain the same. A higher credit utilization ratio, above 30%, can negatively affect a credit score.

Another factor influenced by account closure is the length of credit history. Credit scoring models consider the average age of all credit accounts; older accounts are more favorable. While a closed account can remain on credit reports for up to 10 years and continue to be factored into the average age during that period, it will eventually fall off. This eventual removal can shorten the average length of credit history, potentially impacting the credit score.

Additionally, if the closed account represented a significant part of a consumer’s credit mix—the variety of credit types managed—its closure could also have a minor effect. Losing an available line of credit can also remove a financial safety net for emergencies or large purchases.

Strategies to Maintain an Open Account

To prevent a credit card account from being closed due to inactivity, consumers can adopt several proactive strategies. Making small, infrequent purchases is an effective way to signal activity to the issuer. This could involve buying a cup of coffee, a tank of gas, or a single item online. The key is to ensure there is some transaction activity, even if minimal, on a regular basis.

Setting up a small, recurring bill to be paid automatically via the card is another reliable method to maintain activity. Examples include a streaming service subscription or a utility bill. It is important to also set up automatic payments from a bank account to the credit card to ensure the bill is paid in full and on time, avoiding any negative marks. Regularly reviewing credit card statements helps monitor account activity, confirm the account remains open, and detect any potential unauthorized charges or unexpected fees.

Sometimes, simply contacting the credit card issuer to express continued interest in the account can be beneficial, especially if they are considering closure. In some cases, it might even be possible to downgrade a card with an annual fee to a no-fee version to keep the account open without incurring unnecessary costs.

Steps After Account Closure

Discovering a credit card account has been closed can be unsettling, but there are steps consumers can take to manage the situation. First, it is advisable to verify the closure and its accuracy by checking credit reports from all three major bureaus, which can be accessed annually at AnnualCreditReport.com. This ensures the information is correctly reflected and helps identify the specific reason for closure.

Next, contact the credit card company directly to understand the precise reason for the account closure. While it is generally rare for accounts closed due to inactivity to be reopened, it may be possible if the request is made quickly, often within 30 to 60 days of the closure. Be prepared that the terms, such as the annual percentage rate (APR) or credit limit, might change if the account is reinstated.

Managing other open credit accounts responsibly becomes even more important after a closure. This includes maintaining low credit utilization on remaining cards and consistently making on-time payments to mitigate any potential negative impact on the credit score. Reviewing the entire credit report for any other unexpected changes or inaccuracies is also prudent. If replacing the closed account becomes necessary, consider the timing of new credit applications, as new inquiries can temporarily affect a credit score.