What Happens If You Have a Credit Card but Don’t Use It?

It is common for individuals to possess credit cards that see little to no activity, perhaps acquired for a specific purpose or as part of an introductory offer. While an unused credit card might seem benign, its mere existence on a financial record carries various implications. This article explores what it means to have a credit card that remains largely untouched, examining its effects on credit standing, the card’s operational status, and practical management strategies.

Impact on Credit Health

An unused credit card can significantly influence an individual’s credit report and overall credit score. One of the primary ways this occurs is through the credit utilization ratio, which measures the amount of revolving credit used compared to the total available credit. Keeping an unused credit card open contributes to the total available credit, which can help lower this ratio if other cards carry balances, generally viewed positively by credit scoring models. Lenders typically prefer a credit utilization ratio below 30% to indicate responsible credit management.

The average age of accounts is another factor influenced by the presence of an unused credit card. This metric considers the average length of time all credit accounts have been open, with a longer average generally benefiting credit scores. An older, unused credit card can therefore contribute positively by extending this average. Conversely, closing an old credit card account could reduce the average age of all accounts, potentially impacting the credit score.

The variety of credit types, known as credit mix, plays a role in credit scoring models, typically accounting for about 10% of a FICO score. Having different types of credit, such as revolving accounts like credit cards alongside installment loans, demonstrates a diversified financial responsibility. An open credit card, even if unused, contributes to this mix, showing the ability to manage revolving credit.

Understanding Account Status

Beyond credit scores, the operational status of an unused credit card account is subject to the issuer’s policies. Credit card issuers have specific guidelines regarding account inactivity and may close an account if it remains unused for an extended period. This period can range from a few months to several years. Issuers may also choose to reduce the credit limit on an inactive card rather than closing it.

Inactivity fees, also known as dormancy fees, for credit cards were largely banned in 2010. While annual fees may still apply to certain cards regardless of use, general inactivity fees are no longer permitted for most major credit cards.

Cardholders should regularly review statements for all credit accounts, including unused ones. This practice helps to detect any unauthorized activity or fraudulent charges promptly. Monitoring statements also ensures awareness of any changes to the card’s terms, such as alterations to credit limits or the introduction of new fees.

Managing Unused Cards

For those with unused credit cards, strategies exist to maintain their active status or to manage their closure. To prevent an issuer from closing an account due to inactivity, a cardholder can make a small, infrequent purchase, such as buying coffee or gas, and then immediately pay off the balance in full. This minimal activity typically registers the card as active. Another method involves setting up a small recurring bill, like a streaming service subscription, to be charged to the card and then paying that balance off each month. Consistent positive payment activity, even for small amounts, is typically reported to credit bureaus, which can help support credit scores.

An individual might choose to close an unused credit card to avoid annual fees associated with the card, simplify personal finances by reducing the number of open accounts, or manage the temptation of having too much available credit. Before initiating a closure, redeem any accumulated rewards, as these can sometimes be forfeited upon account termination.

The process for closing a credit card account generally involves contacting the credit card issuer directly, either by phone or through their online portal. Ensure any outstanding balance on the card is paid off completely before requesting closure. After the request is made, obtain a confirmation of the account closure in writing and monitor credit reports for several months to confirm the account is reported as closed with a zero balance.