If your credit card account becomes inactive for an extended period, a lender may close it on your behalf. Learn more about inactive credit cards with help from Equifax. [Duration - 1:36]
Highlights:
- Paid accounts that are inactive may be closed by the lender after a certain period of time
- You may not be notified before this happens
- The cancellation may impact your debt to credit utilization ratio and your mix of credit accounts
You may not have given much thought to the credit card in the back of your wallet or in a drawer – the one that was paid off and that you haven’t used in a while.
But after a certain period of time, which varies depending on the lender or creditor’s policies, they may consider your account “inactive” and it may be closed.
Remember that when it comes to credit, it’s important toshow that you can handle financial commitments responsibly. A part of that is being able to use credit cards responsibly by paying them off regularly, on time, every time.
If you weren’t using the credit card, will the cancellationimpact you at all? That depends on several factors, but here are some of the things you should know about account inactivity.
How long can my account be inactive before it's closed?
It depends on the company. Accounts may be deemed inactive if there aren’t any new purchases on the card for a certain period of time. You may want to consider speaking with the credit card company with whom you have an account to learn more about its policies on account inactivity.
Will I be notified before my account is closed?
Not necessarily. Credit card companies aren’t required to give you any notice that they’re closing your account. The Credit Card Act of 2009 requires lenders and creditors to provide customers with 45 days’ notice of major changes to their account, but that doesn’t include card cancellation notification because of inactivity.
How does this affect my credit history?
A credit card canceled for inactivity may impact you in the following ways:
- The cancellation may affect your debt to credit utilization ratio, which is the amount of credit you're using as compared to the amount of credit available to you. Creditors and lenders prefer to see a lower ratio of how much debt you have compared with how much available credit you have.
- Lenders and creditors like to see that you are able to responsibly handle different types of credit. This includes installment loans and credit cards, to name a couple. If you have only one credit card and it is closed, it may impact the variety of your credit types, which could impact your credit scores.
In addition, if a credit card is closed due to inactivity, you may lose card benefits or accumulated rewards. If you have a credit card, be sure to understand the company’s policy about rewards and benefits if an account is closed due to inactivity.
Please note that a closed account isn’t immediately removed from your credit reports. Even if you paid the account as agreed, it can remain on your reports for up to 10 years.
What can I do?
If your card has been canceledbut you want to keep it, you can contact the credit card company about the cancellation. Some lenders will reinstate the account, although you may be subject to a credit check. If you decide not to ask that the card be reinstated, it’s a good idea to check your credit report to make sure the card account shows as closed. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com. You can also create a myEquifax accountto get six free Equifax credit reports each year. In addition, you can click “Get my free credit score” on your myEquifax dashboard to enroll in Equifax Core Credit™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is one of many types of credit scores.
How do I avoid having credit cards canceled for inactivity?
To keep a credit card active, you may want to consider using it – responsibly – every few months, if only for small purchases. You might also consider putting a small recurring charge on the card to keep it active, or making it your primary card for a frequent purchase -- say, for gasoline purchases.
FAQs
How does this affect my credit history? A credit card canceled for inactivity may impact you in the following ways: The cancellation may affect your debt to credit utilization ratio, which is the amount of credit you're using as compared to the amount of credit available to you.
Is it bad to let a credit card go inactive? ›
The other risk of leaving a card inactive is the issuer might decide to close the account. If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.
Do banks close inactive credit card accounts? ›
Credit card issuers can close your account due to what's known as "inactivity," meaning you haven't used the card in a certain amount of time — let's say a year or more — and the issuer now assumes you have no use for that account. But if even an account is closed, all is not lost.
Is it better to cancel unused credit cards or keep them? ›
In most cases, however, it's best to keep unused credit cards open so you benefit from longer credit history and lower credit utilization (as a result of more available credit). You can use the card for occasional small purchases or recurring payments to keep it active as opposed to using it regularly.
How long after inactivity do credit cards close? ›
If you don't use a credit card for a year or more, the issuer may decide to close the account. In fact, inactivity is one of the most common reasons for account cancellations. When your account is idle, the card issuer makes no money from transaction fees paid by merchants or from interest if you carry a balance.
What happens to a credit card that is never activated? ›
Credit card issuers can decide to shutter an account that's never been activated, and an account closure can harm your credit scores in more than one way. For starters, it can affect the length of your credit history, which is a factor in how credit scores are calculated.
What happens if I don't reactivate my credit card? ›
If you don't activate a credit card within a certain timeframe and don't use it, your account may be closed automatically and be reported as 'closed by credit grantor', which could have a negative impact on your credit.
Can you reopen an inactive credit card? ›
More often than not, issuers will let you reopen a closed credit card account. But your request may be unsuccessful if your timing doesn't abide by the issuer's policies.
Is it bad to close a credit card with zero balance? ›
Your credit utilization ratio goes up
By closing a credit card account with zero balance, you're removing all of that card's available balance from the ratio, in turn, increasing your utilization percentage. The higher your balance-to-limit ratio, the more it can hurt your credit.
Does it hurt your credit if a credit card company closes your account? ›
Highlights: Closing a credit card could change your debt to credit utilization ratio, which may impact credit scores. Closing a credit card account you've had for a long time may impact the length of your credit history. Paid-off credit cards that aren't used for a certain period of time may be closed by the lender.
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
Is it good to have a credit card and not use it? ›
Not using a credit card isn't necessarily a bad thing. However, it can come with some unintended consequences. Although charging inactivity fees is no longer legal, issuers have other options at their disposal — some of which could affect your credit score, your available credit and more.
Do unused credit cards affect your credit score? ›
Not using a credit card will not directly hurt your credit score. But if the company decides to reduce the limit, or completely close the account, your credit score may take a hit. Thus it is important to make minimal use of all your credit cards at regular intervals.
What happens if you have a credit card but never use it? ›
The bottom line. Credit card inactivity will eventually result in your account being closed. A closed account can have a negative impact on your credit score, so consider keeping your cards open and active whenever possible.
How bad is a closed account on a credit report? ›
The bottom line. Having a closed account on your credit report isn't necessarily a bad thing. If the account shows on-time payments and was in good standing when it was closed, it could help your credit score.
Is it bad to let a credit card close? ›
Closing a charge card won't affect your credit history (history is a factor in your overall credit score). Closing a credit card could hurt your credit score by increasing your credit utilization if you don't pay off all your balances.
Does letting a credit card expire hurt your credit? ›
Canceling or closing a credit card account can also average the length of credit history, also known as the average age of accounts. When you close an account, the average age of accounts decreases, potentially harming your score.
Do you have to cancel a credit card if you don t activate it? ›
Your account is considered open from the date you're approved for the card. If you don't activate your card your account will still be open, you just won't be able to use it.
