What Happens If I Don’t Use My Credit Card?

Being a credit card user means you need to perfect the act of balancing. While it is never a good idea to overuse your card, not using it at all also comes with consequences.

Here are some of the things that may likely happens if you don’t use your credit card:

Your Credit Card Might Get Cancelled

Not using your credit card for a long period of time might trigger the issuer to close off your account. Closing credit card accounts might negatively affect your credit score even if it closing it wasn’t your intention, especially if you have been holding to the card for the longest time.

Your credit score might take a dip if you have your card closed because of inactivity. Aside from that, canceling your credit card also robs you of the chance to use it for emergencies and other things such as car and hotel rentals where credit cards are often required.

Not using your credit card may take away the option to access it just when you most need it. There are experts who recommend using your credit card at least once annually so that it doesn’t get closed because of inactivity.

You Might Fail to Spot Fraudulent Credit Card Charges

If you didn’t use your card for a particular month, it is easy to assume that things are fine and you might not even think of checking your statement. However, it increases the risks that you might overlook fraudulent charges that might be unnoticed for weeks or even months.

You might want to use the app or check online to ensure that there is nothing that looks suspicious on your statements. Not using your credit card at all may end up hurting your credit down the road if you are unaware of any unauthorized charges.

It Can Make Your Credit Score Stagnant

Just like how those leg muscles feel a bit weaker after skipping squats at the gym, the same thing can happen to your credit if you don’t use it.

Not using your card completely, even if it is not likely to have a negative effect on your credit score, except if the card is closed or cancelled, won’t make the meter move towards a more positive direction.

Is It Better to Cancel a Frequently Used Credit Card?

The answer depends. It is a must to consider your available credit, big picture financial problems, and credit history. For instance, are you charged with a high annual fee? Some might think that the best choice for them is using their idle card for smaller monthly purchases and paying the full balance. It helps to build your credit score and payment history while avoiding dips that result from closing an account.

There is also a possibility that you got a lot of credit cards to manage and having one or two canceled can help you better organize your finances as a whole. There are times when the simplicity of just having a card or two is worth it provided that you know its possible effect to your personal financial wellbeing.

Do you know what is meant by insufficient credit history means? If not here is a detailed article which can help you in understanding.