Here's Why I Intend to Use All of My Credit Cards Today

Having a credit card canceled can be a hassle.

It's the middle of February, and I plan to Christmas shop tonight. I'll probably do a little birthday shopping, too. I have nine credit cards, and my job this evening is to make a purchase using each of them at least one time.

Why I'm going on a charging spree

When it comes to my children, I don't have a favorite. In terms of credit cards, though, I have an absolute favorite, a card I use daily. Its primary selling point is a great rewards system that pays for one nice vacation each year. The other eight cards sit in reserve. And that's what gets me into trouble.

I received a letter from one of the credit card companies last week telling me that if I don't use the card sometime soon, it will be canceled.

Can they do that?

Credit card companies are under no legal obligation to let users know that their cards are being canceled due to inactivity. Thanks to the Credit Card Act of 2009, companies must give customers 45 days' notice when there are significant changes to their accounts. Still, for some reason, that rule does not apply to cancellation due to inactivity.

Why I care

You may wonder why I care if they cancel the card. After all, I don't use it anyway. There are two reasons:

1. Any time a consumer has a credit card canceled, it can affect their credit utilization ratio. In short, this ratio measures how much debt you carry in relation to how much credit you have access to. Keeping a very low balance relative to your credit limit makes it look like you're in control of your spending, but having a card closed lowers your credit limit. The bottom line is that this ratio makes up 30% of our overall credit score. I refuse to let my credit score take a beating because I forgot to use a card.
2. I don't like the idea of losing rewards points. Back when I used the card, I accumulated a fair number of airline points. It's possible I'll lose all those points if the card is canceled.

What if?

I've spent the past few days thinking about that letter. First, I realize I'm fortunate that the company let me know I'm teetering on the edge. As mentioned, it did not have to do that.

What gets me is how tough having a card canceled for inactivity might be on someone. Let's say a person is rightfully concerned about credit card debt and keeps one card safely tucked away for emergencies. Now, imagine that it's the middle of winter, their furnace kicks the proverbial bucket, and they're left shivering in their house. A repairperson comes, and when the homeowner pulls out the emergency credit card to pay, the payment does not go through.

There's something scary about not knowing that a credit card has been canceled until it's needed.

Prevention

The shopping I do this evening is preventive in nature. I'm going to use each card to make one purchase, and one week from today, I'll go back through and pay each card in full. While there's no hard-and-fast rule regarding how often a credit card should be used to remain active, experts recommend pulling it out for a small purchase every three months.

Yes, it will take a lot of work to come up with nine purchase ideas when I'm not in the mood, but having a card canceled due to inactivity sounds like a bigger hassle.

I think I may put some Christmas music on.