What happens if I get approved for a credit card but don't use it?

The Sleeping Dragon: What Happens When You Get Approved for a Credit Card But Don’t Use It?

Congratulations, you’ve been approved for a credit card! That sleek piece of plastic represents access to a line of credit, a safety net for emergencies, and a potential tool for building a solid financial future. But what happens if you decide to tuck it away in a drawer and never actually use it? Does it simply sit there, waiting patiently for its moment in the sun? The answer is a little more nuanced than you might think.

While not using a credit card might seem harmless, there are a few important considerations to keep in mind, ranging from potential account closures to overlooked opportunities.

The Inactivity Inactivation: A Credit Card’s Biggest Fear

The primary concern with an unused credit card is its potential deactivation due to inactivity. Credit card companies are in the business of… well, credit. They make money when you use your card and pay interest or fees. If your card sits dormant for an extended period (typically 12-24 months, though policies vary), the issuer may close the account. This is a common practice, and the exact timeframe is usually outlined in the card’s terms and conditions.

While closing the account doesn’t directly impact your credit score in the same way as a missed payment, it can have an indirect effect. Here’s how:

• Reduced Credit Availability: Closing a credit card reduces your overall available credit. This impacts your credit utilization ratio, which is the amount of credit you’re using compared to the total amount available to you. A lower utilization ratio is generally better for your credit score. If your total available credit decreases and you maintain the same balances on your other cards, your utilization ratio increases, potentially negatively affecting your score.
• Loss of a Long-Standing Account: If the closed card was one of your older accounts, it could negatively impact the “age of credit” component of your credit score. A longer credit history generally contributes to a better score.

Beyond Inactivity: Staying Vigilant, Even with an Unused Card

Even if you’re not actively using your credit card, it’s crucial to regularly monitor your account activity. Why?

• Fraud Prevention: A deactivated card doesn’t mean it’s immune to fraud. Criminals can still attempt to access your account information. Regularly checking your statements, even online, allows you to quickly identify any unauthorized activity.
• Maintaining Account Standing: Ensure your contact information with the credit card issuer is up-to-date. This allows them to reach you if they detect suspicious activity or need to send important notifications.

So, Should You Use Your Credit Card?

The decision to use your credit card depends on your individual financial situation and goals. If you’re disciplined with your spending and can pay your balance in full each month, using your credit card responsibly can offer several benefits:

• Building a Strong Credit History: Regular, responsible use and timely payments are the cornerstones of a good credit score.
• Earning Rewards: Many credit cards offer rewards such as cash back, points, or miles that can be redeemed for travel, merchandise, or statement credits.
• Building a Safety Net: Having access to a line of credit can be helpful in case of emergencies.

The Takeaway: An Unused Card Requires Active Management

Getting approved for a credit card is just the first step. Even if you choose not to use it immediately, don’t let it become a forgotten relic in your wallet. By understanding the potential consequences of inactivity and actively monitoring your account, you can ensure your unused credit card doesn’t inadvertently damage your credit score or expose you to fraud. Think of it as tending to a sleeping dragon – dormant, but still requiring careful attention.