If You Don’t Use Your Credit Card, Will You Be Charged?

When a credit card remains unused, many consumers wonder if they will still incur charges or face other financial consequences. Understanding credit card fees and how card issuers manage inactive accounts is important. This information clarifies common misconceptions and provides insight into maintaining a healthy financial profile.

Common Charges on Credit Cards

Credit card inactivity fees, also known as dormancy fees, were banned by the Credit CARD Act of 2009. This regulation prevents major credit card issuers from charging consumers solely for not using their accounts.

However, a credit card can still incur other types of charges regardless of usage if these fees are part of its terms and conditions. Annual fees are a common example, ranging from no cost to over $600 per year, particularly for cards offering premium rewards or benefits. If your card has an annual fee, you remain responsible for paying it even if you do not make any purchases. Other fees, such as late payment fees, foreign transaction fees, cash advance fees, or balance transfer fees, are incurred only if specific actions occur or terms are violated.

How Non-Use Affects Your Credit Profile

Not actively using a credit card does not directly harm your credit score. An open credit card account with a high credit limit, even if unused, can be beneficial for your credit utilization ratio. This ratio, which measures the amount of credit you are using compared to your total available credit, is a significant factor in credit scoring models. Maintaining a low credit utilization ratio, below 30%, is viewed favorably by lenders.

An unused card contributes to your total available credit, which can help keep your utilization low, especially if you carry balances on other cards. If an older, unused account is closed, it can affect the average age of your credit accounts, potentially impacting your score. Closed accounts remain on your credit report for up to 10 years, but they no longer contribute to the ongoing aging of your credit history. A diverse credit mix, including both revolving credit like credit cards and installment loans, is also a positive factor in your credit profile. Closing your only credit card could diminish this diversity.

Actions by Card Issuers for Inactive Accounts

Credit card issuers may close accounts that remain inactive for an extended period. This action is taken because idle accounts do not generate revenue for the issuer through transaction fees or interest on balances. Issuers also manage their overall credit exposure, and an unused credit line might be reallocated to another customer who will utilize it.

The length of inactivity that triggers account closure varies widely among different card issuers and specific card products. This period can range from several months to a year or more. Credit card companies are not required to provide advance notice before closing an account due to inactivity. Some issuers may send a notification as a courtesy, but it is not a universal practice.

Considerations for Holding Unused Credit Cards

For consumers with unused credit cards, it can be advantageous to keep these accounts open. Maintaining older accounts helps preserve a longer credit history, which is a positive component of your credit score. These cards contribute to your total available credit, supporting a lower credit utilization ratio across your overall credit portfolio.

If you wish to keep an unused card active, a simple strategy is to make a small purchase periodically, such as a streaming service subscription or a small retail item, and then pay off the balance immediately. This demonstrates responsible usage without incurring interest charges. When deciding whether to close an unused card, consider if it carries an annual fee that outweighs its benefits or if having the card tempts you to overspend. Closing a card, especially one with a significant credit limit, could increase your credit utilization on your remaining cards, potentially impacting your score.