How to keep your credit card accounts active

Credit card in hand, young woman works at home.Image: Credit card in hand, young woman works at home.

In a Nutshell

If your credit card is closed because of inactivity, it may hurt your credit and cut you off from the card’s benefits. Here’s why that matters and how to avoid it.
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When it comes to your credit card accounts, it can be a use-it-or-lose-it situation.

That doesn’t mean you need to live in constant fear of reprisal if you’re not swiping regularly. But if you stop using a credit card for too long, the credit card company might have the right to close the account.

On the surface, you might think, “Who cares? I’m not using it anyway.” But there are some drawbacks to losing an account because of inactivity, so it’s worth knowing how to keep your credit card accounts active for the long haul.

Keep reading to learn why it’s important to keep your credit card accounts active, and how it might negatively affect you if your account is closed.

How to keep your credit card accounts active

Here are a few things you can do to avoid the risk of having your account shut down by your card issuer.

1. Keep it in your wallet and use it for small purchases

Perhaps you don’t like using a particular credit card anymore because you get higher rewards from another card. But consider keeping your old card in your wallet so you can still use it every once in a while.

You can use your card for small purchases, such as a pack of gum at the grocery store, just to keep it active. As long as you swipe the card at least every few months, you shouldn’t run into any problems.

2. Put a small recurring charge on the card

If you’re afraid you might forget to use the card occasionally to keep it active, you can automate it by using your card to pay for a recurring charge. For example, you can use the card to pay for your internet bill, phone bill or a subscription account, such as Netflix or Audible. This way the card is used at least every couple of months.

You might even be able to set up an automatic payment to the card from your checking account so that you also don’t have to worry about forgetting to pay off the card each month.

3. Make it your primary card for an online shopping account

If you shop online regularly, you can set up one or more credit cards for each account you have with retailers. For example, if you shop at Amazon now and then, add the card that you don’t want to use for everyday purchases as your primary payment method.

This can ensure you use the card regularly enough to avoid closure due to inactivity.

Why do credit card companies care if you use your card?

Credit card issuers make money when you use your card. Even if you’re not paying interest, the issuer can still make money from various fees charged to you as well as the merchant fees it earns every time you swipe.

So if you’re not using your card at all, there may be no financial benefit to the issuer to maintain your account on their end.

How long can my account be inactive before it gets closed?

It depends on the credit card issuer. A credit card company may deem your card inactive if there isn’t a balance and/or there aren’t any payments or purchases on the card for an extended period of time. Contact your card issuer using the number on the back of your card to find out what the policy is. Or you can check out the card terms and conditions online.

Why should I care about keeping my credit card active?

There are a few reasons why it’s important to keep your credit card active.

A closed account could lower your available credit

When a credit card account is closed, it can affect your credit by lowering your credit utilization. Your credit utilization, or how much of your available credit you are using, is calculated by dividing your credit card balance by your credit limit. Some credit-scoring models will also look at your overall credit utilization across all cards.

Let’s say you have three cards with $4,000 in total balances and $16,000 in total credit limits. Your credit utilization is currently 25%, which is lower than the recommended 30%.

But if your account with a $6,000 credit limit gets closed because of inactivity, your total credit limit would now be $6,000. Suddenly that $4,000 total balance equals a credit utilization of 40%. Depending on the credit-scoring model, that could ding your credit scores.

It could also affect your average age of accounts

Another factor that goes into your credit scores is your length of credit history, and having a credit card close can negatively affect that. So if the credit card company closes a card that is significantly older than your other cards, it could lower your average age of accounts. But closed accounts can remain on your credit reports for seven to 10 years.

One way some credit-scoring models determine your length of credit history is by taking the average age of all of your credit accounts. For example, if you have one credit card that you opened eight years ago and another card that you opened two years ago, your average age of accounts would be five years. If the eight-year-old card closes, your average account age will decrease.

Some scoring models also consider the age of your oldest account along with your average account age. If it’s an old credit card account that is closing, it can negatively impact your credit scores.

You could lose some card benefits

If you’ve earned rewards with the card, you may lose them if the issuer closes the account. Some credit card issuers may give you a grace period, but don’t bet on it.

If the card has other benefits you enjoy — say, a night’s stay at a hotel every year — you may also lose that when the issuer closes the account.

Whether you use a credit card regularly or not, letting your rewards sit often makes it easier to forget about them. Take advantage of your card’s benefits and use your rewards as you earn them.

Bottom line

Keeping an unused credit card account active shouldn’t take a lot of effort. But if you get complacent and let a card stay inactive too long, you might end up kicking yourself if the issuer closes the account and your credit scores are affected or you lose the benefits of the card.

About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Credit Karma, you can find his wo… Read more.