Don’t Let Your Credit Card Get Dusty

Though many of us have several credit cards in our wallets, only a few of them may be used on a regular basis. The others may be ignored for months or even years. There are a few good reasons to keep all your credit cards in regular rotation.

Avoid Credit Card Closure

If you’re not using your credit card, your credit card issuer may close your credit card. Recently, credit card issuers have been known to close inactive credit cards more frequently so they can issue credit cards to consumers who will use them.

On the surface, it may seem that losing a credit card you never use doesn’t matter, but it does. More often than not, there a negative consequence to having a credit card closed. That consequence is a hit to your credit score. Losing that credit line could raise your overall credit utilization, especially when you have balances on your other credit cards.

When your credit utilization goes up, your credit score goes down. You can rebound your credit score by paying down your other credit card balances, but you can save yourself from damage in the first place by using your credit card periodically.

You could easily miss the memo that your credit card got closed. Thinking your account is still active, you’ll try to use the credit card and get the embarrassing message that your credit card has been declined. If you don’t have another payment method at the time, you’ll have to walk away from the checkout counter empty-handed and possibly embarrassed.

Annual Fees

Credit card issuers are prohibited from charging a credit card inactivity fee. This fee was assessed on credit cards that remained dormant for more than a year. But, credit card issuers have been known to continue to charge fees on credit card that go unused

For example, they can reserve the right to charge you an annual fee, but waive the fee if you use your credit within the year or make a certain amount of minimum purchases. Or, they can charge an upfront fee and then credit the fee back to your account as long as you use your credit card within 12 months. The result is the same though – you pay a fee when you don’t use your credit card and you don’t pay a fee when you do use a credit card.

The wording of these fees and the ways you can avoid them is often tricky, but it’s included in the terms and conditions you receive when you apply for a credit card. You may not even realize you’ll be charged a fee for credit card nonuse. A foolproof way to avoid the fee – use your credit card.

How Often Should You Use a Credit Card

Sure, some credit cards become favorites, e.g. those that offer great rewards. Others become pests, e.g. the one with the astronomical interest rate. Still, if you don’t want to lose the credit card, use it often enough to show your credit card issuer you’re still interested. Once every three months is often good enough. You can make a small purchase on the credit card, then pay the balance when the statement comes.