Credit Card Inactivity: 4 Critical Aspects You Never Considered

Credit card inactivity can have a whole host of repercussions. All too often, we barely realize these consequences and simply assume it to be a good thing. After all, we are not utilizing credit that is freely available to us, living a debt-free life, etc.

However, surprising as it may seem, credit card inactivity can, in fact, work in ways against you.

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With that thought in mind, we look at some critical aspects of credit card inactivity that you may not have considered in the first place.

credit card inactivity

1. Impact on Credit Score

If you do not use your credit card at all for an extended period, it can potentially impact your credit score. This is because the lender or bank could close the account, lessening the length of time you’ve had active credit. This is a factor that contributes to your credit score.

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2. Impact on Credit Availability

Credit card inactivity that leads to credit card closure can have a dramatic impact on your credit availability.

Even if a credit card was not required in the first place, access to credit in emergencies is an important reason for having a credit card. Not having a credit card available to handle emergencies means you have to plan your expenses carefully each month and have robust savings.

Credit Card Inactivity
Credit Card Inactivity can have a wide range of consequences, which you must be aware of. Image Source – https://www.marketwatch.com/story/this-is-what-happens-to-your-credit-score-when-you-ditch-credit-cards-2019-06-21.

3. Banks are Free to Close Inactive Credit Card Accounts

Banks are completely free to close inactive credit card accounts. Not only that, they are not liable to provide any justification for doing so, although in most cases, at least a notice is sent out in advance.

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It is not very difficult to actually understand and appreciate this aspect; at the end of the day, banks issue credit cards so that they make money out of customers in the form of fees and interest charges.

Naturally, when you do not use your credit card at all, banks do not earn anything out of you! You are not really a customer they want and therefore, they do not mind going ahead and closing your inactive credit card account altogether.

4. Surprises on Credit Card Inactivity Can Be Avoided

Thankfully, there are solutions at hand that can ensure there are no surprises even if you haven’t used your credit card for a long time.

Usually, banks do send you a notice about their intent to close your account once they notice credit card inactivity to be a regular feature on your credit card.

This is the time you need to be agile and use your card promptly. Once you have done that, contact your bank and tell them that you have used your credit card and intend to continue doing so going forward. As a regular customer, your bank should not have any qualms about taking your card off its “inactive credit card” status.

In case your bank has already rendered your card inactive, all is not lost. Firstly, you could call your bank and ask them to reinstate your card, assuring them that a ‘credit card inactivity’ scenario will no longer apply in its case going forward. Secondly, besides calling your bank, you could also consider writing to them, which is often more fruitful in producing the desired results.

Conclusion

In all the above, the clear message is that having a credit card and letting it slip into a ‘credit card inactivity’ position is far from desirable.

If you have a credit card, you must use it. You don’t have to use it every day if you don’t want to, but even if you use it say once or twice a month, it will be more than sufficient to convey to your bank that you are a regular user.