What Happens If I Don’t Use My Credit Card for a Year?

Many people acquire credit cards, sometimes leaving them unused for extended periods. While it might seem harmless, inactivity can lead to unintended consequences. Understanding these potential outcomes is important for maintaining a healthy financial profile and knowing how dormancy affects your credit standing and account status.

Credit Score Impact

Inactivity does not directly lower a credit score, but actions by the card issuer, like closing the account, can have an indirect effect. A significant factor is the credit utilization ratio, which measures credit used against total available credit. If an unused card with a substantial limit is closed, overall available credit decreases. This can cause the utilization ratio to rise on remaining active cards if balances are carried. A higher utilization ratio, particularly above 30%, can negatively impact credit scores.

The average age of accounts also influences credit scores. Older accounts in good standing positively contribute to credit history length, accounting for 15% of a FICO score. If an older, unused credit card account closes, it can shorten the average age of your credit history, especially if it was one of your oldest accounts. While closed accounts remain on credit reports for up to 10 years and are factored into the average age calculation during that period, their eventual removal will impact this metric. A reduction in open accounts can also alter the credit mix, though this factor typically has a less pronounced effect than utilization or age.

Account Closure

Credit card issuers monitor accounts for activity and may close dormant accounts due to lack of use. This can occur after six months to two or three years, though the timeframe varies by issuer and card product. Issuers may close these accounts because they do not generate revenue from transaction fees or interest when idle, and maintaining them incurs administrative overhead.

Card issuers are not legally obligated to provide advance notice before closing an account due to inactivity. The Credit Card Act of 2009 does not require such notification. This means a cardholder might only discover their account has been closed when attempting to use the card or reviewing their credit report. Once an account is closed by the issuer, it is generally difficult to have it reinstated, though some issuers may consider it if contacted quickly after closure.

Fees and Rewards

Concerns about inactivity fees are unfounded for credit cards in the United States. Inactivity fees, also known as dormancy fees, were banned in 2010 through an amendment to the Truth in Lending Act.

However, accumulated rewards points or cash back can be at risk if an account becomes inactive or is closed. While many general credit card rewards programs do not have expiration dates as long as the account remains open and in good standing, co-branded airline or hotel loyalty programs often have different policies. Points and miles earned through these specific programs may expire after 12 to 24 months of inactivity if there are no earning or redemption activities. If a credit card account is closed, any unredeemed rewards may be forfeited, depending on the card’s terms and conditions.

Keeping Your Account Active

To prevent a credit card account from being deemed inactive and potentially closed, simple actions can be taken. Making a small periodic purchase, such as a streaming service subscription or a small retail item, and paying it off immediately, is an effective strategy. This demonstrates ongoing activity to the issuer without incurring debt or interest charges. Many financial professionals suggest using the card at least once every few months, or even once a month, to ensure it remains active.

Setting calendar reminders can help ensure each credit card account is used regularly. Alternatively, a small recurring charge, such as a utility bill or a minor subscription, can be placed on the card with automatic payments set up to cover the balance. If an account has recently been closed due to inactivity, contacting the credit card issuer directly can sometimes lead to reinstatement, though this is not guaranteed and is more likely if done promptly.