Is it OK to keep a credit card and not use it?

The Dangers of Keeping an Unused Credit Card

Maintaining a healthy credit score is essential for financial stability. However, unused credit cards can pose a significant risk to your financial well-being. Here’s why it’s important to be aware of the potential consequences:

Account Closure:

Credit card companies may close inactive accounts after a period of inactivity, typically ranging from six months to two years. This can negatively impact your credit utilization ratio, a key factor in determining your credit score. A higher credit utilization ratio indicates that you’re using a large portion of your available credit, which can lower your score.

Increased Fraud Risk:

Unused credit cards remain vulnerable to fraud. Dormant cards may not be monitored as closely by cardholders, providing opportunities for unauthorized use. Fraudulent transactions can damage your credit history and lead to financial losses.

Damage to Credit Rating:

Closing an inactive credit card can shorten your credit history, which is another factor considered in calculating your credit score. A shorter credit history can lower your score, making it more difficult to qualify for loans and favorable interest rates.

Monitoring Inactivity:

To avoid the negative consequences associated with unused credit cards, it’s crucial to monitor their activity regularly. Set up alerts to notify you of any transactions or account changes. If you plan to keep a credit card inactive for an extended period, consider the following steps:

• Set a calendar reminder: Mark a date on your calendar a few months before the expected account closure period and contact the credit card company to request that the account remains open.
• Make a small purchase: Use the card to purchase a small item every few months to keep the account active.
• Consider a balance transfer: Transfer a small balance from another credit card to the inactive one. This will create account activity and prevent it from being closed.

By taking proactive steps to manage your unused credit cards, you can protect your credit rating, safeguard against fraud, and maintain financial stability. Remember that maintaining healthy financial habits is an ongoing process that requires regular monitoring and responsible decision-making.