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).
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.
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 still will 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.
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.
If you don’t pay your credit card bill at all, you will likely get charged a late fee, lose your grace period, and have to pay interest at a penalty rate. Your credit score will also go down if you fall at least 30 days behind on a credit card bill payment. If you continue to not pay, your issuer may close your account, though you’ll still be responsible for the bill.… read full answer
If you don’t pay your credit card bill for a long enough time, your issuer could eventually sue you for repayment or sell your debt to a collections agency (which could then sue you). But it’s not all or nothing with credit card payments. It’s an entirely different story if you simply pay the minimum amount required.
If you always pay at least the minimum required by your due date, your account will remain in good standing and you won’t have to face late fees, penalty rates or credit score damage. You’ll just have to pay interest on the remaining balance at your card’s regular rate.
Here’s what happens if you don’t pay your credit card:
If you pay the minimum required but not the full balance due: Your total unpaid balance will accrue interest at your card’s normal APR. You’ll also lose your grace period, so new purchases will accrue interest right away, too.
If you don’t pay at all: Your account will be reported as past-due to the credit bureaus after two missed due dates. That will hurt your credit score. In addition, a late fee of up to $38 may be tacked onto your balance (but it can’t exceed your minimum payment). Your issuer may also apply a penalty APR to new purchases, though they must inform you 45 days in advance.
If you get 60 days behind on minimum payments: The issuer can apply a penalty APR to your entire existing balance.
If you get 180 days behind on minimum payments: The credit card company will have to charge off your debt (consider it a loss for taxes). But that doesn’t mean they’ll stop trying to get you to pay. They may sell your debt to a collections agency, or they may choose to sue you.
If you don’t pay for 3-15 years: You are vulnerable to a lawsuit, depending on which state you live in. Time-barred debt is not a valid defense until your state’s statute of limitations runs out. If you lose a lawsuit and are ordered to pay, you might have your wages or bank account garnished.
So the bottom line is that you should always try to make at least the minimum payment on your credit card. Sure, you’ll still owe interest, but you won’t have to deal with the other negative consequences of not paying your credit card at all.
If you’ve fallen behind, the most important thing to do is catch up on your missed minimum payments and bring your account back to current status. After that, your goal should be to pay your full balance due for two months straight. Though that’s easier said than done, doing so will restore your grace period and stop the buildup of new interest.
When you cancel a credit card, your credit score could fall in the short term, depending on how old the account is and how much other credit you have. But it might also benefit your credit score in the long run if you manage the rest of your finances better as a result of having one fewer credit card account to worry about.… read full answer
Why canceling a credit card could hurt your credit score temporarily:
One way canceling a credit card account could hurt your credit score is if it reduces the amount of credit that you have available and thus increases your overall credit utilization. Keeping a low utilization is key for a good credit score. So closing a high-limit credit card account will hurt your score more than closing a low-limit account.
Another way canceling a credit card account could hurt your credit score is if it brings down the average age of your accounts. That can make it seem like your credit history is shorter than it really is. Closing one of your oldest accounts will lead to more credit score damage than closing a newer one.
Plus, no matter which credit card account you cancel, you’ll have one fewer account reporting positive information to the credit bureaus each month.
Why canceling a credit card might still make sense:
Despite the potential for short-term credit score damage, canceling a credit card can still be the right decision. For example, if you’re paying an annual fee for a card you don’t use, and you’re not planning to apply for a mortgage or car loan in next few months, it’s probably better to close the account.
Credit scores usually rebound within 3-6 months after canceling a credit card. And if you don’t plan to borrow during that time, you don’t have to worry about that drop.
But an unused credit card with no annual fee is another story. Even a credit card with zero balance still reports positive info to the credit bureaus on a monthly basis. That means it’s an asset to your credit score.
In any case, you should know all the facts before you cancel a credit card, so you can make an informed decision. We’ll summarize the key considerations below.
Here’s what happens to your credit score when you cancel a credit card:
Credit score drops: Your credit score often goes down because the average age of your open accounts decreases and your overall utilization increases (since you have less available credit).
Age matters: Closing newer accounts won’t have as much of an impact as closing older ones.
Limit matters: Closing low-limit accounts won’t do as much damage as closing high-limit ones.
Scores bounce back: Your credit score should rebound within 3-6 months of canceling your credit card account. Make sure to have at least one open credit card remaining and pay all your bills on time.
When score drops matter: It’s not a big deal if you don’t need the best score possible for those 3-6 months. For example, if you’re not applying for a loan, trying to find an apartment or applying for jobs, your score shouldn’t matter too much.
What happens if you don’t cancel: The card can continue to help your credit score. Even if you don’t make purchases with it, it will still report positive information to the credit bureaus each month. This is definitely worth considering if your card does not charge an annual fee.
Bottom Line: Avoid canceling your oldest card and your card with the highest credit limit. That will mitigate the amount of credit score damage. And if you have to close your oldest or highest-limit card, make sure you do it at a time when you don’t need your credit score to be at its best.
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