Key points about: never activating a credit card
-
Activating a credit card allows a person to use it.
-
You usually have 45-60 days to activate a new credit card before your credit card issuer sends you a message or cancels your account.
-
Not activating may affect your credit score because your credit utilization ratio or credit mix may be impacted if your card issuer closes the account.
Consider this scenario: Youapply for a credit card, get approved, and the card arrives a few days later. But you forget to activate it or have second thoughts about activating it and put it off.
What happens if you decide to hold off on activating the card until you’re sure you want to use it? Does a never-activated credit card affect your credit score, even if you don’t technically activate it or make any purchases with it? The simple answer is yes.
Simply applying for credit can impact your credit score
First, even though you need to activate the card in order to make purchases with it, the act of activating a credit card doesn’t have an effect on yourcredit score. By going through the process of applying for a new credit card and opening the new account, you have already been approved for a certain credit limit, even if you never activate the card.
The key action that affects your credit score is applying for that card in the first place. During the process of applying for a new credit card account, your credit history has already been pulled and checked by the credit card issuer, and that “hard inquiry” may have an effect on your credit score.
Check your Credit Score for free
Never activating your card may have consequences
If you don’t activate your card, there are a few things to watch out for that could sneak up on you.
What if you didn’t activate your card as soon as you got it?
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. This may affect your credit by increasing your credit utilization ratio, shortening your credit history, or reducing your credit mix.
How long do you have to activate a credit card?
Your card issuer may contact you if you haven’t activated your card after a certain amount of time (typically 45 to 60 days depending on the issuer) to determine if you received it. If you wait longer than that, you may need to request a new card; and if you wait even longer than that, card issuers typically close accounts that aren’t used within a certain time period.
What happens if you never activate a credit card?
If you get a card with an annual fee, you risk missing this payment if you never activate your card, which may hurt your credit score. This fee is often charged on your first bill and repeats annually on the anniversary of your account opening. Missing it or making a late payment toward it can negatively affect your credit score.
Responsible use is beneficial
Once you have the new credit card, any impact on your credit score—as a result of applying for the new credit account—has already occurred. So, as far as your credit score is concerned, any impact to your credit score happens after applying for the card, not as a result of activating the card.
Did you know?
In some cases, opening a new credit account can give you a higher total credit limit, which can improve your credit utilization ratio—the percentage of your total available credit that you’re using—so long as you don’t rush to max out the new card.
See if you’re pre-approved
In many cases, it’s how you use a credit card that really matters.
Using your credit card responsiblyto make occasional small purchases and paying the bill on time and in full can help you build credit history without incurring interest charges on purchases. Closing your new credit card account might actually hurt your credit score, because it would reduce your total available credit and thus make your credit utilization ratio look higher to the credit reporting agencies.
If you’re having doubts about whether you actually want your new card, you can always cancel it. But if you’re confident that you can use the new card responsibly and pay it off on time without accumulating debt, go ahead andactivateit and proceed to use it wisely.
Instead of looking at a never-activated credit card as a possible threat to your credit score, think of the potential to use the card to help build your credit. The credit card issuer has already decided that you’re creditworthy enough to receive the new card. As long as you can use your new credit limit responsibly, your new card can be a source of convenient spending, cash flow management, and can even help you build your credit over time.
FAQs
You usually have 45-60 days to activate a new credit card before your credit card issuer sends you a message or cancels your account. Not activating may affect your credit score because your credit utilization ratio or credit mix may be impacted if your card issuer closes the account.
Will it affect my credit score if I don t activate my credit card? ›
How not activating a credit card affects your credit. When you apply for a credit card, an inquiry typically appears on your credit report. This can ding your credit score roughly five points, though it will bounce back soon. Whether you activate your card or not has no direct affect on your credit.
What happens if I get approved for a credit card but I don t activate it? ›
When you're approved for a card, the credit card issuer opens your account on the day of approval. If you don't activate your card, the account is still open. Your card issuer may reach out after 45 to 60 days as a reminder, reports CNBC Select, and after that time, you may need to request a new card.
Does inactive credit card affect credit score? ›
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 long does it take for a credit card to close due to inactivity? ›
If you stop using the card altogether, there's a chance that your account will be closed (typically after at least 12 months of inactivity). This will appear on your credit report and could drop your score, so it's vital to keep your account active and make the payments needed to keep your account in good standing.
Can I cancel a credit card before activating it? ›
Can you cancel a credit card before activating it? You can cancel a credit card before activating it, but it will be the same as canceling a card at any other time. And it might still impact your credit scores.
Can I close a credit card I just opened? ›
If your application gets approved and your account is opened before you can contact the card issuer, then the only way to close it is to cancel the account like you would any other credit card.
How many credit cards are too many? ›
Owning more than two or three credit cards can become unmanageable for many people. However, your credit needs and financial situation are unique, so there's no hard and fast rule about how many credit cards are too many. The important thing is to make sure that you use your credit cards responsibly.
How often should I use my credit card to keep it active? ›
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.
Will paying off your credit card balance every month improve your credit score? ›
Paying off your credit card balance every month is one of the factors that can help you improve your scores. Companies use several factors to calculate your credit scores. One factor they look at is how much credit you are using compared to how much you have available.
An active card can help your credit, but a zero balance is best for your score. July 5, 2023, at 9:00 a.m. Carrying a balance of any amount means you owe interest.
Is it better to close a credit card or leave it open with a zero balance? ›
In general, it's better to leave your credit cards open with a zero balance instead of canceling them. This is true even if they aren't being used as open credit cards allow you to maintain a lower overall credit utilization ratio and will allow your credit history to stay on your report for longer.
Should I let an inactive credit card close? ›
Length of credit history
Closing an unused credit card causes that account to stop aging, which can negatively affect your average account age and hurt your credit. If the account you close is one of your oldest accounts, that damage can be even worse.
Is 5 credit cards too many? ›
There is no right number of credit cards to own, and owning multiple cards gives you access to different rewards programs that various cards offer. Owning five cards would give you a bigger total line of credit and lower your credit utilization ratio. If you can manage five cards at once, it's not too many for you.
How do I cancel my credit card without hurting my credit? ›
How to cancel a credit card
- Call and negotiate fees. ...
- Pay off any remaining balance before closing the card. ...
- Redeem your rewards. ...
- Update billing information where this card is being used. ...
- Call your credit card issuer or cancel online. ...
- Destroy the canceled card.
Without activating the card controls, the debit or credit card will not work either offline or online. Every new debit and credit card now comes with a card transaction control limit toggled off at the time of its issuance.
