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Here’s What Happens if You Don’t Use a Credit Card for a Year Or More

Two hands holding a wallet taking cash out of it

Image source: The Motley Fool/Upsplash

A lot of people have credit cards they use on an almost daily basis. And if you’re a credit card user, you may find yourself swiping or tapping your card several times a week to buy things like groceries and gas.

But there may come a point when you stop using one of your credit cards. Maybe it’s that your other cards have a better rewards program. Or maybe you’re consciously trying to pay for more expenses with cash.

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You should know that not using a credit card could cause it to be canceled. And that could impact your credit score for the worse.

Will an unused credit card get canceled after 12 months?

It’s a fairly common practice for credit card companies to cancel cards due to inactivity. And the time frame for that happening can vary by card, so you’ll need to check your credit card agreement to see what you’re dealing with.

It’s not unusual, though, for a credit card to get canceled if it hasn’t been used for 12 months in a row. And worse yet, your credit card company may decide to cancel your card without issuing you a notice of a pending cancellation first.

The good news, though, is that you can’t be charged a fee for not using your credit card for a year or more. Inactivity fees were banned in 2010.

The problem with having a credit card canceled

Chances are, if there’s a credit card of yours that you haven’t used for a year or more, you’re unlikely to miss it if your issuer decides to cancel it. But it’s a good idea to avoid that scenario for one key reason — a canceled card could bring your credit score down.

One big factor that goes into calculating your credit score is your credit utilization ratio, which measures the amount of revolving credit you’re using at any given point in time. Keeping that ratio to 30% or less could help your credit score improve or remain strong, whereas a higher ratio than that could hurt your score.

Here’s where a canceled credit card comes into play. Let’s say you have three credit cards with a total spending limit of $10,000, and you’re carrying a $2,000 balance. That puts you at 20% utilization, which isn’t a bad rate at all.

But what if one of those cards gets canceled due to inactivity, and your total spending limit across your cards suddenly drops to $6,000? Suddenly, you’re at 33% utilization, which isn’t nearly as good for your credit score as 20%.

That’s why it’s best to not let a credit card go unused for too long if it adds nicely to your total spending limit. Of course, it is a good idea to cancel a credit card with an annual fee that you’re not getting good use out of. But if the card isn’t charging a fee and can help with your credit utilization, then it pays to avoid having it canceled.

An easy way to avoid having a credit card canceled

One simple way to avoid a credit card cancellation due to inactivity is to set up a small recurring charge on that card, like a streaming service that costs under $10 per month. That way, if the card’s rewards program leaves much to be desired, you won’t lose out on too much cash back by charging that small expense every month. At the same time, you’ll be keeping your account open without having to think about it.

Remember, not only can a higher credit limit help your credit score, but you never know when you might need to charge a large expense on a credit card. Having access to credit is a good thing, so do your part to keep your cards active if there’s no fee for hanging onto them.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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