Does it hurt to have a credit card you don't use? This question has been on the minds of many people who have accumulated credit cards over time but find themselves not using them frequently. The answer is not straightforward, as there are both pros and cons to having unused credit cards. In this article, we will delve into the potential impacts of having an unused credit card and explore whether it can harm your financial health.
Firstly, let's understand what happens when you have an unused credit card. If you do not use the card for purchases or cash advances, the balance on the card remains unchanged. However, if you fail to pay the minimum payment due by the due date, the issuer may charge you late fees, interest, or even report the account to credit bureaus as delinquent. This could negatively affect your credit score, making it harder to secure loans or mortgages in the future.
On the other hand, some credit card issuers offer rewards programs that can be beneficial if you use the card regularly. These rewards can include points, cash back, or miles that can be redeemed for travel expenses, merchandise, or statement credits. By not using the card, you miss out on these potential benefits. Additionally, some cards offer zero-percent APR promotional periods, which can be a great way to transfer debt without incurring additional costs.
Now, let's consider the impact on your financial health. If you have multiple unused credit cards with high-interest rates, you could be paying unnecessary fees and accumulating debt. On the other hand, if you have one or two unused cards with low-interest rates, the impact on your finances might be minimal. It's essential to evaluate the terms and conditions of each card before deciding whether to close them.
Another aspect to consider is the psychological impact of having unused credit cards. Some people may feel guilty or burdened by the presence of unused cards, leading to stress and anxiety. Others may worry about the possibility of fraudulent activity on their accounts. While these concerns are valid, they are generally overblown. Most credit card companies have robust security measures in place to protect against fraud, and closing unused cards can actually reduce the risk of identity theft.
In conclusion, whether it hurts to have an unused credit card depends on various factors. If you have multiple unused cards with high-interest rates and no rewards program, it could potentially harm your financial health. However, if you have one or two unused cards with low-interest rates and valuable rewards programs, the impact might be minimal. It's crucial to evaluate the terms and conditions of each card and make informed decisions based on your individual financial situation.
To avoid any negative impacts, consider the following steps:
- Review your credit card statements: Check your statements regularly to ensure you are aware of all charges and payments due.
- Pay your bills on time: Make sure to pay at least the minimum payment due on time to avoid late fees and damage to your credit score.
- Consider closing unused cards: If you have multiple unused cards with high-interest rates, consider closing them to reduce debt and fees.
- Opt for rewards programs: If you have unused cards with rewards programs, use them regularly to maximize your benefits.
- Monitor your credit score: Regularly check your credit score to ensure it remains healthy and monitor any changes caused by your credit card usage.
In conclusion, while having an unused credit card does not inherently hurt your financial health, it can lead to unnecessary fees and damage to your credit score if not managed properly. By reviewing your statements, paying bills on time, considering closing unused cards, opting for rewards programs, and monitoring your credit score, you can ensure that your unused credit cards do not become a burden or a source of stress.