Credit cards are a convenient way to make purchases and build credit history. However, many people wonder if their credit card will be closed if they don't use it for an extended period. The answer is not straightforward, as it depends on several factors such as the card issuer's policy, your account activity, and your overall financial behavior. In this article, we will explore the possibility of credit cards being closed due to inactivity and provide tips on how to maintain your card without risking its closure.
Firstly, let's understand why some credit card companies might close unused accounts. Credit card companies are in the business of making money through interest earned on outstanding balances. If a cardholder does not use their card frequently or has a low balance, it may not be cost-effective for the company to keep the account open. Additionally, inactive accounts can lead to higher costs for the company due to maintenance fees, fraud prevention measures, and customer service expenses.
However, it's important to note that not all credit card companies have a policy of closing unused accounts. Some institutions may prefer to keep the account open and allow the cardholder to use it when needed. This can be beneficial for those who occasionally need cash advances or want to avoid having to apply for a new card each time they need one.
To determine whether your credit card could be closed due to inactivity, you should review your cardholder agreement or contact your credit card company directly. Most card issuers will inform you of their specific policies regarding inactive accounts. It's also worth noting that some banks offer incentives for maintaining a certain level of activity on your card, such as rewards points or cashback offers.
If you find out that your credit card could be closed due to inactivity, there are several steps you can take to prevent this from happening:
1. Regularly use your card: Make small purchases or payments regularly to keep the account active. Even if you don't have a large balance, using the card occasionally can help prevent it from being closed.
2. Keep a low balance: Maintaining a low balance on your card can show that you are responsible with your finances and less likely to default on payments. This can help protect your account from closure.
3. Pay your bills on time: Missing payments or having late fees can negatively impact your credit score and increase the likelihood of your card being closed. Make sure to pay your bills on time to maintain a good credit history.
4. Consider adding an annual fee: Some credit cards offer an annual fee but come with benefits such as rewards programs or travel insurance. If you value these benefits, consider paying the annual fee to keep the card open.
5. Check your statements regularly: Review your credit card statements regularly to ensure there are no errors or unauthorized charges. Notify your bank immediately if you notice any discrepancies.
6. Consider other options: If you find that your credit card is being closed due to inactivity, consider applying for a different card with more favorable terms or a card that better fits your needs.
In conclusion, whether your credit card gets closed due to inactivity depends on the policies of the card issuer. To prevent your card from being closed, it's essential to maintain regular usage, keep a low balance, pay bills on time, and stay informed about your account status. By following these guidelines, you can ensure that your credit card remains active and serves its intended purpose.