What Happens If You Open a Credit Card and Don’t Use It?

It is common for individuals to open a credit card account, perhaps for an introductory offer or a specific purchase, and then let it remain unused. While this might seem harmless, an inactive credit card can have several implications for your financial health. Understanding these potential consequences is important for managing credit effectively.

How Unused Credit Cards Affect Your Credit Score

An open credit card, even if unused, can influence your credit score through factors like your credit utilization ratio. This ratio measures the amount of credit you are using compared to your total available credit. Keeping an unused credit card open and with a zero balance can positively impact this ratio, as it increases your total available credit without adding to your debt, ideally keeping your utilization below 30% for a good score.

The average age of credit accounts is another factor influenced by unused cards. Maintaining older, unused accounts can extend your overall credit history, which lenders generally view favorably as it demonstrates a longer period of credit management. Closing an old account, particularly one you have had for many years, can reduce your average account age and potentially impact your credit score.

Your credit mix also plays a role. An unused credit card contributes to your revolving credit, and having a diverse mix of revolving and installment credit (like loans) can demonstrate your ability to handle various forms of debt responsibly. Even without activity, credit card issuers generally report the account’s status, including its credit limit, to credit bureaus.

Understanding Fees and Account Activity

While not actively using a credit card prevents interest charges, it does not necessarily exempt you from fees. Some credit cards carry annual fees, which are charged regardless of how often the card is used. These fees can range significantly. It is important to review your cardholder agreement to identify any applicable annual fees that could accrue on an inactive account.

Beyond annual fees, some cards might impose inactivity fees if no transactions are made over an extended period, though these are less common now. Checking the terms and conditions of your credit card agreement is important to understand any such charges. Card issuers may also close inactive accounts after a period of non-use. This occurs because dormant accounts do not generate revenue for the bank and represent a cost to maintain.

When an issuer closes an account due to inactivity, it can impact your credit score by altering your credit utilization ratio and potentially the average age of your accounts. The closure removes the associated credit limit, which can cause your overall credit utilization to increase if you carry balances on other cards. While the closed account remains on your credit report for up to 10 years, its closure removes it from actively contributing to your available credit calculation.

Security and Monitoring Unused Credit Cards

An unused credit card still carries security risks. Even if you are not actively using the card, its number can be compromised through data breaches, phishing scams, or other fraudulent activities. A lack of regular use means you might not notice unauthorized charges as quickly as you would on an active card, potentially allowing fraud to go undetected for longer periods. This delay can complicate efforts to dispute fraudulent transactions and recover lost funds.

To mitigate these risks, regularly monitor statements for all your credit card accounts, including those you do not use. Reviewing statements allows you to identify any unfamiliar charges or suspicious activity promptly. Many credit card issuers offer email or text alerts that can notify you of any activity on your card, such as purchases exceeding a certain amount or online transactions. Setting up these alerts can provide near real-time notifications, enhancing your ability to detect and respond to potential fraud quickly.

Safeguarding your physical card and its details is important, even if it remains in a drawer. Protect the card from theft and avoid sharing its information unnecessarily. Regularly checking your credit reports can also help you spot accounts opened fraudulently in your name or other inaccuracies that might arise.