If you don’t make at least an occasional purchase with your credit card, most banks will automatically close no-annual-fee cards after a certain period of inactivity. When a bank closes your account, your credit score might take a small hit and you’ll lose any rewards you’ve accrued. You probably don’t want this to happen.
Here’s what you need to know.
What happens if you don’t use your card?
While there is no rule requiring you to use your cards, banks don’t want to keep your credit card open if you’re not using it. If you’re not using your card, the bank isn’t making money. But they are still extending you credit and incurring some small cost to service your account.
When will a bank close my card?
There is no standard timeframe, but most banks will start the process of closing your account after 18-24 months of inactivity. Your Cardmember Agreement may lay out specific rules about how often you must use your card.
Most banks will send you a notice that your card will be closed if it is not used within a certain timeframe. The bank may give you a month or two to use the card before closing it. If you make even one purchase on your card, your card will remain open. If you don’t use your card the bank will close your account.
They’ll probably notify you before closing your card.
In most cases, a bank would prefer to keep you as a customer and get you to start using your card again. You’ll likely get some sort of notification before a bank simply closes your account.
Last year, I got a notice from Bank of America informing me that I hadn’t used my account in 24 months. This was a small business credit card that I applied for, but didn’t end up using because my other credit cards offered better rewards on the card’s bonus categories. And there was really no reason for me to continue using the card.
Ultimately, I ended up closing that particular card. But I have gotten similar notices other issuers of other cards. There are a few cards I keep open because they have large credit lines and they help me keep my credit score high. Since they have no annual fees, there’s little downside to keeping them open.
Will I get charged a fee for not using my card?
The short answer is no. You won’t be charged a fee for not using your card, though you’ll still be charged your card’s annual fee (if it has one) even if you never use your card.
Previously, some credit cards required you to use your card at least once a year. If you didn’t use your card at least once a year, you could be charged a fee known as an “inactivity fee” or a “dormancy fee.” These types of fees were eliminated in 2010, thanks to the Truth in Lending Act.
What happens if an issuer closes your card?
If an issuer closes your card, you will likely get a notice by mail that your account has been closed. Your account will show as a closed account on your credit report. And your credit report may reflect that the account was closed by the bank.
Your rewards might be gone.
As a reader of this site, you are likely wondering what happens to your rewards if a card issuer cancels your card. That depends on your card’s rewards program. With many cash back credit cards and in some credit card points programs, you forfeit your rewards the moment your card is closed. In some cases, you can transfer your points to another card account or you’ll have an option to redeem them for a period. If you can still access your cash back or bank rewards points after your account is closed, you should redeem your points as soon as possible. It’s likely your card’s terms will cause you to forfeit your points after 30-90 days.
If your card was an airline or hotel credit card and you were accruing points is an airline or hotel loyalty program, your points are probably safe. At least, unless the airline or hotel program has rules about points expiring after a certain period of inactivity. In every case, it’s best to drain your point balances before closing the card yourself if you decide that you don’t want to keep it.
If you live in New York State, recent legislation means that you’ll have 90 days from the date your bank notifies you that your account is closed to transfer or redeem your points.
Impacts to your credit score: Negative, but likely minor
When a bank closes your credit card, a few things will happen that will likely impact your credit score. First, your available credit will decrease because a closed line no longer counts toward your available credit. Second, eventually the closed account will drop off your credit report, likely lowering your overall average age of accounts.
If the credit line on your closed card represents a large proportion of your available credit, you might see your credit score drop noticeably. However, if you have a lot of cards or large credit lines elsewhere, the difference in your credit score may not be noticeable.
How to avoid getting your cards closed for inactivity? Use cards at least once a year.
In practice, as long as you use your credit cards at least once a year, you won’t be at risk of having a bank close your account. You don’t have to use them for anything terribly huge; just charge a small purchase to your card and pay it off immediately to reset the clock.
