Do Credit Cards Get Closed Due to Inactivity?
by Christy Bieber | Aug. 13, 2019
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Credit card inactivity can sometimes lead to your account being closed. Find out here when and why credit cards are closed for this reason.
Image source: Getty Images
If you have a credit card and you haven’t used it for a while, this could become a problem. The issue: Credit cards get closed due to inactivity. Card issuers want you to use your card so they can earn money from fees they charge merchants. If you don’t use your card, you don’t provide any benefit to them and there’s little reason to keep your account open.
To be on the safe side and make sure your cards don’t get closed for inactivity, it’s a good idea to use your card every few months. There’s no industry standard for how long it will be before your credit card gets closed for inactivity, but it could happen within just a few months with some card issuers depending on your situation.
This guide will help you better understand when and why cards get closed due to inactivity, as well as providing some tips for what to do to make sure this doesn’t happen to you.
When does credit card closure due to inactivity occur?
Unfortunately, it can be difficult to predict exactly when a card will get closed if you don’t use it. There are no specific rules for how long it takes before a card issuer closes your card, and credit card companies don’t include this information in your cardholder agreement.
Some card issuers may close your card after as little as a few months of inactivity while others will allow you to keep your card dormant for years before closing it. It depends on the issuer’s policy, as well as your own past credit history with the company. If you’ve had a card for a long time, been a great customer, and charged a lot, you’re much less likely to have a card quickly closed for inactivity than if you just opened the card recently and never used it at all.
Why do issuers close inactive accounts?
Card issuers can only extend so much credit. If you have an open credit card and have available credit, this is credit the issuer can’t extend to another customer. If you never use your card, the card company is better off closing your account so the credit available to you can be redirected to someone that will actually make purchases with their card.
Do card issuers provide any type of warning before closure?
In most cases, credit card issuers do not warn you before your card is closed. There’s no requirement for your card company to let you know that it is thinking about cutting off your access to credit if you don’t use your card soon.
How will a card that’s closed due to inactivity affect you?
It can be a big problem if your credit card is closed due to inactivity because the loss of the card will affect your credit utilization ratio.
Credit utilization ratio is one of the most important components of your credit score. Your credit utilization ratio is calculated based on credit used vs. credit available. If you have two different credit cards, each with a $5,000 line of credit, and you’ve charged $2,000 on one and nothing on the other, then your utilization ratio would be 20% ($2,000 / $10,000).
However, if the card with the $0 balance gets closed due to inactivity, now you’re in a situation where your available credit is cut in half and your credit utilization ratio is 40% ($2,000 / $5,000).
A lower credit utilization ratio is much better for your credit score because creditors get nervous when you’ve used too much of the credit you’ve been extended. If your ratio gets above 30%, your credit score can take a major hit.
Sadly, if one of your credit cards is closed due to inactivity, your credit utilization ratio will immediately go much higher due to the reduction in credit available to you. This could have a big and immediate impact on your credit score that it’s hard to recover from unless you can quickly pay down debt or gain access to new credit.
How can you avoid this happening to you?
The good news is, it’s very easy to avoid having your credit card closed due to inactivity. You just have to use your card. If you have another card you prefer using, there are a couple of simple ways to do this:
- Make one purchase a month using the card you don’t want to go dormant. You could make this your first purchase of each month, just to make sure you never forget.
- Add your card to one of your online shopping accounts. If you shop regularly with a website every few months or so, set it up so you pay with the card that you don’t want to go dormant. That way, you can make sure you’re using that card on a semi-regular basis.
- Set up a recurring charge. If you have a small monthly bill, such as for a streaming video or music service, make the card you don’t want to get closed your payment method for this bill. That way, the card will reliably be used every month without you having to do anything at all.
Just remember to pay the card on time when you use it -- which can be a challenge if you use it only sporadically. To avoid forgetting, pay off your purchase right away after you make it or set up autopay for the amount of the recurring charge.
Can you reopen a credit card that’s been closed due to inactivity?
If your credit card account is closed due to inactivity, you can call the credit card issuer and ask if they will reopen it. You’ll likely need to promise to make a purchase immediately.
Many card companies will decline to reopen your account, so there is no guarantee this will work. If the card issuer won’t reopen the account, try asking if they will let you transfer the credit you previously had available to a different card. This would work only if you had another credit card with the same issuer, and there’s no guarantee it will be allowed -- but it would at least help you to ensure your credit utilization ratio won’t go up.
If your card issuer isn’t willing to help you, though, there’s nothing you can do -- you’ll just have to deal with the consequences of the account closure.
Don’t let your credit card get closed because of inactivity
It’s important you avoid credit card closure due to inactivity, as this could hurt your credit score and leave you with less credit available during emergencies.
Because different credit card companies have different policies for how long your card can be dormant before it’s closed for inactivity, it’s important to use your card every few months to make sure your account isn’t involuntary closed. Making a small purchase or paying a recurring bill on your card can help you ensure your card isn’t closed due to lack of use, so consider these options on cards you want to keep active but don’t necessarily keep in your wallet.
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About the Author
Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. 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.
