If your credit card account becomes inactive for an extended period, a lender may close it on your behalf. Learn more about inactive credit cards with help from Equifax. [Duration - 1:36]
Highlights:
- Paid accounts that are inactive may be closed by the lender after a certain period of time
- You may not be notified before this happens
- The cancellation may impact your debt to credit utilization ratio and your mix of credit accounts
You may not have given much thought to the credit card in the back of your wallet or in a drawer – the one that was paid off and that you haven’t used in a while.
But after a certain period of time, which varies depending on the lender or creditor’s policies, they may consider your account “inactive” and it may be closed.
Remember that when it comes to credit, it’s important toshow that you can handle financial commitments responsibly. A part of that is being able to use credit cards responsibly by paying them off regularly, on time, every time.
If you weren’t using the credit card, will the cancellationimpact you at all? That depends on several factors, but here are some of the things you should know about account inactivity.
How long can my account be inactive before it's closed?
It depends on the company. Accounts may be deemed inactive if there aren’t any new purchases on the card for a certain period of time. You may want to consider speaking with the credit card company with whom you have an account to learn more about its policies on account inactivity.
Will I be notified before my account is closed?
Not necessarily. Credit card companies aren’t required to give you any notice that they’re closing your account. The Credit Card Act of 2009 requires lenders and creditors to provide customers with 45 days’ notice of major changes to their account, but that doesn’t include card cancellation notification because of inactivity.
How does this affect my credit history?
A credit card canceled for inactivity may impact you in the following ways:
- The cancellation may affect your debt to credit utilization ratio, which is the amount of credit you're using as compared to the amount of credit available to you. Creditors and lenders prefer to see a lower ratio of how much debt you have compared with how much available credit you have.
- Lenders and creditors like to see that you are able to responsibly handle different types of credit. This includes installment loans and credit cards, to name a couple. If you have only one credit card and it is closed, it may impact the variety of your credit types, which could impact your credit scores.
In addition, if a credit card is closed due to inactivity, you may lose card benefits or accumulated rewards. If you have a credit card, be sure to understand the company’s policy about rewards and benefits if an account is closed due to inactivity.
Please note that a closed account isn’t immediately removed from your credit reports. Even if you paid the account as agreed, it can remain on your reports for up to 10 years.
What can I do?
If your card has been canceledbut you want to keep it, you can contact the credit card company about the cancellation. Some lenders will reinstate the account, although you may be subject to a credit check. If you decide not to ask that the card be reinstated, it’s a good idea to check your credit report to make sure the card account shows as closed. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus by visiting www.annualcreditreport.com. You can also create a myEquifax accountto get six free Equifax credit reports each year. In addition, you can click “Get my free credit score” on your myEquifax dashboard to enroll in Equifax Core Credit™ for a free monthly Equifax credit report and a free monthly VantageScore® 3.0 credit score, based on Equifax data. A VantageScore is one of many types of credit scores.
How do I avoid having credit cards canceled for inactivity?
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.
FAQs
If you have a credit card, be sure to understand the company's policy about rewards and benefits if an account is closed due to inactivity. Please note that a closed account isn't immediately removed from your credit reports. Even if you paid the account as agreed, it can remain on your reports for up to 10 years.
Is it bad to let a credit card go inactive? ›
Letting one of your oldest cards close due to inactivity can significantly curtail the length of your credit history, which has a negative effect on your credit score. Maintaining at least a small amount of activity on each of your cards helps keep them active and open.
Do inactive accounts affect credit score? ›
The short answer is yes. When your card remains unused for months or even years, the lender may close your account. And once your account closes your credit utilization rate increases, ultimately leading to a poor credit score. Your credit utilization accounts for 30% of your credit score.
Is it better to cancel unused credit cards or keep them? ›
Canceling a credit card will cause a direct hit to your credit score, so more often than not, you'll want to keep the account open. Correctly managing an open, rarely-used account may require some extra attention, but the added effort will help your credit in the long run.
What happens if I get a credit card and never activated it? ›
What happens if you don't activate a credit card. Your account is considered open from the date you're approved for the card. If you don't activate your card your account will still be open, you just won't be able to use it.
How long can you leave a credit card inactive? ›
If you don't use a credit card for a year or more, the issuer may decide to close the account. In fact, inactivity is one of the most common reasons for account cancellations. When your account is idle, the card issuer makes no money from transaction fees paid by merchants or from interest if you carry a balance.
Do inactive credit cards hurt credit score? ›
If you stop using your credit card for new purchases, your card issuer can close or curb your credit line and impact your credit score. Your credit card may be closed or restricted for inactivity, both of which can hurt your credit score.
Will closing inactive cards hurt? ›
Closing a card hurts your credit mix
Finally, closing a credit card account due to inactivity could hurt your credit mix portion of your credit score, as well.
What are the risks of inactive accounts? ›
Fraudsters could see your inactive accounts as a perfect cover to hide their own actions. If you're not paying attention, your account could be compromised without you realizing it. Another downside to letting an account go inactive is the potential to incur monthly fees until it is reactivated.
Should you keep credit cards at zero balance? ›
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.
So, while there is no absolute number that is considered too many, it's best to only apply for and carry the cards that you need and can justify using based on your credit score, ability to pay balances, and rewards aspirations.
How many credit cards is too much? ›
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.
Is 3 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.
Do I have to pay for a credit card if I don't activate it? ›
You still owe any annual fees
Your account is opened when your application is approved, so even if you don't activate the credit card you receive in the mail, you still have an open account and you'll still need to pay the annual fee associated with it.
Can you reopen an inactive credit card? ›
Inactivity. Your issuer may decide to close your account after seeing that it hasn't been used for a certain period of time (a few consecutive months, for example). Generally, if your account was closed due to inactivity, you may be able to reopen it.
How do I remove an inactive account from my credit report? ›
Closed accounts can be removed from your credit report in three main ways: (1) dispute any inaccuracies, (2) write a formal goodwill letter requesting removal or (3) simply wait for the closed accounts to be removed over time.
Should I pay off closed accounts? ›
Even after an account is closed, a solid history of paying on time can help your credit score. The positive effect will not be the same as an open account, but it can still bolster your credit score, according to the credit bureau Experian.
How long is an account considered inactive? ›
When an account has no transactions for 12 months, it is considered inactive. If there is no activity for 24 months, it is deemed dormant.
How long does it take for inactive accounts to be deleted? ›
When you don't use your Google Account within a 2-year period, it's then deemed inactive, and all of its content and data can be deleted. Before this happens, you have the opportunity to take action in your account when Google sends you: Email notifications to your Google Account.
