Do you get charged on a credit card if you don't use it?

The Sleeping Giant: Do Unused Credit Cards Still Cost You Money?

The allure of a credit card often lies in its potential benefits: rewards points, travel insurance, and convenient access to credit. But what happens when that shiny new piece of plastic sits gathering dust in your wallet? Do you still get charged if you don’t use a credit card? The short answer is: it depends.

While the idea of a free credit card sitting unused might seem appealing, the reality is more nuanced. Most banks aren’t in the business of maintaining dormant accounts indefinitely. After a period of inactivity, often ranging from six months to a year, many institutions will either restrict the card’s functionality, making it impossible to use for purchases or cash advances, or close the account altogether.

However, the absence of usage doesn’t necessarily mean the absence of charges. Before your card becomes a forgotten relic, consider these potential costs:

• Annual Fees: This is the most common hidden cost of an unused credit card. Many premium cards with extensive rewards programs or travel benefits levy an annual fee, regardless of spending. Even if you never make a purchase, this fee will still be charged annually until you cancel the card. Always check the terms and conditions before applying for a card with an annual fee to ensure it aligns with your spending habits.

• Foreign Transaction Fees: While not directly related to non-use, if you have a card with foreign transaction fees and it remains open, the fee structure remains in place. Should you eventually use the card abroad, these fees will apply.

• Other Potential Fees: Some cards may have other miscellaneous fees, such as late payment fees (even if no payment is due because you haven’t used the card), or balance transfer fees (though these only apply if you’ve transferred a balance). While these are less likely to affect an unused card, it’s crucial to be aware of your card’s specific fee structure.

The Bottom Line:

An unused credit card isn’t necessarily a free ride. While you may avoid interest charges, annual fees and other associated costs can still eat into your finances. Before leaving a credit card to gather dust, carefully review its terms and conditions. If the annual fee outweighs any potential benefits, cancelling the card might be the wisest financial decision. Regularly reviewing your credit card accounts and proactively managing them can save you from unexpected charges and help you maintain a healthy credit profile. Remember, the best credit card for you is one that actively serves your financial needs, not one that sits idly in your wallet.