How often should I use my credit card to keep it active?

The short answer is that nothing is likely to happen if you don’t use your credit card for a few months. Not using your card could actually help your credit score if you have a $0 balance when you stop (contrary to some common myths about keeping a small credit card balance being beneficial).... read full answer

The longer answer is that exactly what happens if you don’t use your credit card depends on which card you have. Some rewards cards will revoke any unredeemed points, miles or cash back you have saved up if you don’t use your credit card at all for a certain period of time – usually around 12 months. And if you don’t use your credit card for 6 months or more, the issuer could close your account. But there’s no standard timeframe for when a credit card issuer will decide to close an account due to inactivity.

Having your account closed due to inactivity could hurt your credit standing and possibly make it seem like your credit history is shorter than it really is. However, you will not be charged any sort of inactivity fee by your credit card company if you don’t use your card to make purchases or other types of transactions for a prolonged period of time. Credit card inactivity fees are banned by law.

As a result, not using your credit card (at least not regularly) can be a great strategy if you want to build credit but are worried about overspending. You just have to make sure your balance is $0 when you stop using your card. A credit card with no balance will get reported to the credit bureaus as being in good standing each month, with an on-time payment and 0% credit utilization. That in turn will lead to credit score improvement if you manage the rest of your finances responsibly.

For your convenience, we’ll summarize the key points to remember below.

Here’s what happens if you don’t use your credit card:

• Nothing is likely to happen if you don’t use your credit card for a few months, as long as you make bill payments for any recurring monthly charges.
• The credit card’s issuer may decide to close your account after a long period of inactivity. There is no standard timeframe, but they will often send a notice in advance and give you a chance to use your card first.
• Some credit card rewards will expire after a certain period of account inactivity. You’ll also lose any rewards you’ve yet to redeem when your account is closed.
• If the credit card you’re not using has a $0 balance and is in good standing, positive information will be added to your credit reports each month the account stays open.
• Unpaid balances from before you stopped using the card will continue to accrue interest. If your balances have been paid in full, you won’t have to send in any new payments.
• If your credit card charges an annual fee, not using the card won’t get you out of having to pay. And if you’re not getting anything out of a card that you’re paying for, you might want to close it.

The bottom line is that not using your card can still be good for your credit. And it’s far better than using your card irresponsibly. So if you don’t trust yourself to limit your spending, it may be wise to set your card aside until you have a necessary expense.

It’s better to pay off your credit card than to keep a balance because paying the card off will save you money on interest. Credit card companies charge interest when you don’t pay your bill in full every month, but you’ll enjoy a grace period with no interest if you always pay your full statement balance by the due date.... read full answer

Some people think you need to carry a balance in order to see positive information on your credit report, but that’s simply not true. You don’t even need to use your credit card to build credit. Simply keeping an account open and in good standing is enough to help your credit.

Here’s why it’s better to pay off your card than to carry a balance:

• If you pay your bill in full each month, you won’t be charged any interest on most credit cards, thanks to a grace period. But you’ll lose the grace period if you don’t pay in full one month, and you’ll have to pay your entire balance for two consecutive billing cycles to get it back.
• You don’t need to carry a balance for a credit card to help your credit score. What matters most for credit building is meeting due dates and keeping credit utilization low.
• Paying your bills on time doesn’t require you to pay your balance in full each month. You just have to make the minimum payment listed on your statement. But if you take on too much debt, you may find it hard to make your monthly payments.
• Carrying a balance makes it harder to keep your credit utilization low, since your everyday spending will be added on top of the amount you’re carrying from month to month. It’s best to use less than 30% of the credit made available to you.

So, to recap, it’s better to pay off your credit card than to carry a balance because it builds your credit history just as well without subjecting you to interest charges. Just remember, not carrying a balance does not mean you have to stop using your credit card. There is a middle ground. A balance will be listed on your credit card statement whenever you make purchases, but if you pay that amount by the due date, you won’t really be carrying a balance.

Using your card regularly actually helps because having a credit utilization ratio between 1% and 10% is slightly better for your credit score than 0%. But credit utilization is based on your statement balance, and your monthly statement comes before the due date. So you can still pay your bill in full every month while doing right by your credit score.

Why 0% APR credit cards are an exception

During the 0% APR introductory period, your balance – whether from a purchase or balance transfer – won’t accrue interest as long as you pay the minimum amount required by the due date each month. So, keeping a balance is expected, but you do have to make monthly payments along the way. And if you don’t pay in full by the end of the 0% period, interest will come into play.

That said, if you’ve got some credit card debt you’d like to get rid of, a 0% balance transfer credit card could help you save a lot of time and money. And if you’re trying to improve your credit, WalletHub’s free daily credit scores and credit analysis can get you on track.

Nothing much happens if you don’t use your credit card for a month. You’ll just need to keep up to date with your monthly payment if you have an existing balance. But your credit card issuer isn’t going to close your account for less than three months of inactivity. And on top of that, you’ll still receive a monthly statement if you don’t make any purchases, but there won’t be anything new to pay off.... read full answer

Interest will still accrue on any balance you had from past months, and you’ll still need to make a monthly payment on that balance. So don’t forget to send that in, if applicable. But if you always pay in full, you don’t need to do anything.

Here’s why you should use your card frequently

The only other thing to consider is that if your card offers rewards, you’ll miss out on a month’s worth if you don’t use it. You’re going to spend some money on necessities anyway, so it’s probably worth it to put your groceries or gas on your card. And it’s good for your credit score to use your card every month, too.