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Not using your credit card can have negative effects, such as your issuer closing your account or accruing fraudulent charges you aren’t aware of. Decide carefully if the benefits of not using your credit card outweigh the consequences.
If you’re one of the millions of Americans looking to raise their credit score, you may think not using your credit card will help. After all, many people hurt their credit score by accumulating too much credit card debt. However, you may be surprised to learn of the potential negative consequences that can happen if you don’t use your credit card.
Read on to learn everything you need to know before you stop swiping your credit card regularly.
Essentially, the worst thing that can happen if you never use a credit card is that your issuer can close your account and your credit score may take a dip. This isn’t unusual – many credit card companies will close an account if there isn’t regular purchasing activity. This can hurt your credit score in a couple ways:
Credit card inactivity occurs when you don’t make any purchases with a credit card over a certain period. The credit card issuer determines this time period—some may be as short as six months, while others may be a year or longer.
Before you stop using a credit card, check the terms and conditions to learn what your credit card issuer considers credit card inactivity and their policy for closing inactive accounts.
Here are other potential consequences for not using a credit card:
Will I Get Charged for Not Using My Credit Card?
Credit card issuers can no longer charge inactivity fees (sometimes called dormancy fees) when you don’t use your card. If you incur an inactivity fee, contact your credit card issuer and the Federal Trade Commission’s Bureau of Consumer Protection.
Whether to close a credit card you don’t use depends mainly on the facts of your situation. Closing a credit card may hurt your credit more than help it, so consider the consequences carefully.
Closing a credit card is generally a bad idea because:
Closing a credit card may make sense if:
If you decide to close a credit card, the process is fairly simple. Start by paying off your balance, redeeming any points or other rewards, and contacting your issuer.
In most cases, it’s better to keep a credit card than close it. Instead of canceling your unused credit card, consider the following alternatives:
If you’re trying to improve your credit or get out of debt, you might initially think not using your credit card is a good idea. While it can be an effective strategy in certain situations, the consequences of not using your card can lower your credit score. Consider carefully whether the consequences are better than keeping your card open. Whether you decide to close it or not, consider monitoring your credit score with Credit.com.
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