How Often Should I Use My Credit Card to Keep It Active?
If you have multiple credit cards, it can be easy to forget about one or two and not use them for an extended period of time. It’s important to be aware that your credit card account can actually be closed by the issuer after just 3-6 months of inactivity. This can have a negative impact on your credit score and raise red flags with credit bureaus when they do a credit check. So, how often should you use your credit card to keep it active and prevent it from being closed due to inactivity? And what are some easy ways to keep your credit cards active every month?
First, let's take a look at why credit card issuers might close your account due to inactivity.
Credit card companies make money from the fees and interest they charge their customers. When a credit card is not being used, the issuer is not making any money from it. Additionally, credit card companies may consider an inactive account to be a higher risk for fraud or misuse. As a result, they may decide to close the account to minimize this risk.
So, how often should you use your credit card to keep it active and avoid having it closed by the issuer?
The general rule of thumb is to use your credit card at least once every 3-6 months. This will show the issuer that the account is being used and is not at risk for fraud or misuse.
Another thing that is important to have in mind is that credit card issuers also take into consideration the credit utilization ratio, which is the amount of credit you are using compared to your maximum credit limit. Ideally, you want to keep your credit utilization ratio below 30%. This means that if your credit card has a maximum limit of $1,000, you should aim to keep your balance below $300.
So, in addition to using your credit card at least once every 3-6 months, make sure to also pay off your balance in full or keep it below 30% of your credit limit. This will show the issuer that you are using your credit responsibly and that the account is not at risk for fraud or misuse.
But what if you have multiple credit cards and it's difficult to keep track of which ones you are using and when?
There are a few different solutions to this problem. One option is to set up automatic payments on your credit cards to ensure that they are being used on a regular basis. For example, you could set up a recurring monthly payment for a small subscription service or utility bill. This will help to keep your credit card active and demonstrate to the issuer that you are using it responsibly.
Another option is to use Credicated, which offers a service that automatically charges your credit card a small amount (less than $1 a month!) to keep your account open and active. This can be a convenient solution if you have multiple credit cards and find it difficult to keep track of which ones you are using and when. By using Credicated, you don't have to worry about a credit line being closed due to inactivity. Credicated can also help build your credit score by ensuring you have a low monthly balance across all your credit card accounts.
Another way to avoid having your credit card closed due to inactivity is to consolidate your credit accounts. If you have multiple credit cards with low balances, consider transferring those balances to a single credit card. This will help to reduce the number of credit accounts you have to keep track of and can also improve your credit utilization ratio. Just make sure to pay off your balance in full or keep it below 30% of your credit limit to avoid damaging your credit score.
Finally, you can also avoid having your credit card closed due to inactivity by setting up account alerts with your issuer. Many credit card companies offer the option to receive alerts for things like low balances, payment due dates, and account activity. By setting up these alerts, you can stay on top of your credit card usage and ensure that your account remains active.
In conclusion, it's important to use your credit card at least once every 3-6 months and keep your credit utilization ratio below 30% to avoid having the account closed due to inactivity. There are a few different solutions to this problem, including setting up automatic payments, using a service like Credicated, consolidating your credit accounts, and setting up account alerts with your issuer. By following these tips and using your credit cards responsibly, you can maintain a healthy credit score and prevent your credit lines from being closed due to inactivity.
FAQ:
How often should I use my credit card to keep it active?
It's generally recommended to use your credit card at least once every 3-6 months to avoid having the account closed due to inactivity.
Can credit card issuers close my account due to inactivity?
Yes, credit card issuers can close your account if it has been inactive for an extended period of time. This is because they consider inactive accounts to be a higher risk for fraud or misuse and may decide to close the account to minimize this risk.
How can I prevent my credit card from being closed due to inactivity?
To prevent your credit card from being closed due to inactivity, make sure to use it at least once every 3-6 months. You can also consider using a service like Credicated, consolidating your credit accounts, or setting up account alerts with your issuer.
Can unused credit cards hurt my credit score?
Yes, having unused credit cards can potentially hurt your credit score. This is because credit bureaus like to see a low monthly balance that is paid on time on every credit card that you have. Therefore, having inactive credit cards can have a negative impact on your credit score. However, having a mix of credit accounts, including credit cards, and other loans, can be beneficial for your credit score as long as you are using them responsibly and keeping your balances low.
What should I do if I have an inactive credit card that I no longer use?
If you have an inactive credit card that you no longer use, it's generally a good idea to either sign it up with a service like Credicated or cancel the account. Canceling the account will help to reduce the risk of fraud or misuse and can also help to improve your credit utilization ratio. Before canceling the account, make sure to pay off any remaining balances and consider transferring any rewards or points to another account.
To find out more about how Credicated can help you avoid credit card account closure click here.
