How to Protect Your Inactive Credit Cards from Fraud

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

How to Protect Your Inactive Credit Cards from Fraud

Do you have multiple credit cards? If so, are you using all of them regularly?

According to January 2016 Credit Karma member data, over 40 percent of members who own at least one credit card and checked their credit report in the past six months had at least one open credit card with no balance reported, which could mean they're not actively using all of their cards.

Doing this might leave you more susceptible to fraud and identity theft. If you don't use a card, you may not monitor the card's statement and could fail to notice if there are unauthorized charges.

Your card may be at risk of fraud even if it's sitting at home in a drawer. Thieves may have acquired your credit card information at some point in the past and will sometimes wait before using or selling stolen credit card information. Also, websites and merchants that have your card's details in their database may get hacked.

So what are things can you do to protect yourself from fraud?

1. Set up online access and alerts to monitor your credit accounts.

Many credit card issuers have automatic fraud prevention measures, but sometimes unauthorized charges get through undetected.

You can help catch fraud early by keeping a close eye on your credit accounts. The first step: setting up an online account. Thomas Nitzsche of nonprofit ClearPoint Credit Counseling Solutions says, "Setting up online access for all your accounts is a great idea because many creditors offer tools that help a consumer properly manage the account - plus it allows for immediate access to activity and history."

Thomas also recommends setting up alerts on your credit cards -- you can request to receive an email or text alert from most major credit card issuers when specific events occur.

With American Express, for example, you can sign up to receive an alert if there's irregular account activity, if cash is withdrawn, or if a purchase of more than a chosen amount is made.

Discover takes security a step further by offering a "Freeze It" function for cardholders. Using the mobile app, website or by making a call, you can temporarily freeze, or unfreeze, your card.

This can be a good option if you temporarily misplace a card or forget it somewhere such as a restaurant where it may not be secure.

2. Keep a card active with automated use and payments.

One hands-off approach to keeping your card active is to use it to automatically pay for an inexpensive monthly bill, such as a Netflix or Hulu subscription.

Then, sign up for automatic payments to pay the credit card statement in full each month. This keeps the card active and builds a history of on-time payments.

If you can add an alert that'll notify you of larger-than-expected transactions to the account and continue to check your account regularly, you'll be set.

3. Alert the issuer immediately if you suspect fraud.

If you do suspect fraud on your account, you should contact the card issuer immediately.

Under the 2009 Fair Credit Reporting Act, your loss for unauthorized credit card charges is capped at $50. If you report the loss of your credit card before it's used, you're not responsible for any charges on your card.

However, if someone makes unauthorized charges on your debit card, your liability could total the amount you have in your account and possibly more, depending on whether you have other accounts linked to your card and how quickly you report the charges.

Bottom Line

Inactive cards may be susceptible to fraud, but you can take preventative measures by setting up alerts on your credit accounts and checking the accounts regularly.

You may also want to avoid closing an account - unless keeping it open is costing you money through, for example, annual fees - as closing an account with payment history might hurt your credit. You can set automatic payments and bill pay to keep an account active and use alerts to detect unusual activity.

About the Author: Louis DeNicola is a personal finance writer and educator. In addition to being a contributing writer at Credit Karma, you can find his work on MSN Money, Cheapism, Business Insider and Daily Finance. When he's not revising his budget spreadsheet or looking for the latest and greatest rewards credit card, you might spot Louis at the rock climbing gym in Oakland, California.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Comment on this Article

Write your comment:
Enter Your Comments