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If you have an unloved credit card lying forgotten in the bottom of a drawer, it could be canceled by the credit card issuer. So could a credit card account that you simply didn't pay. But with a little planning, you can keep your credit card account active and in good standing.
Recurring payments, occasional small purchases and consistent on-time payments can prevent cancellation. While there is no single guideline to say how often you should use your credit card to avoid cancellation, inactive accounts are typically defined as those that have not been used in six to 12 months. Even if it isn't part of your everyday spending habits, here's how to make sure your card remains open in case you need to use it again in the future.
1. Set Up Recurring Payments
Consider putting recurring payments on your credit card. Small bills, such as streaming or music subscriptions, are usually enough to show the card issuers that the card is still being used. If you have multiple credit cards but primarily use a single card, consider distributing small recurring charges among the cards that see less use.
You can also set up an automatic payment to make sure that the bill is paid on time, every time.
2. Make Small Purchases Regularly
You don't have to spend a lot to keep a card active. Even if you only buy lunch or coffee every month or so, that should be enough to show activity on the card and can help you avoid cancellation. Or, you could designate certain cards for various types of infrequent but regular purchases, such as dog grooming, so that you know that the card is getting some use. Light use means that your credit utilization remains low, and that can help your credit score.
3. Call the Credit Card Issuer
Sometimes canceling a credit card may be the right decision for you. If, for example, you have a jewelry store credit card that can't be used anywhere else, you can probably let go of that if you don't buy jewelry often.
However, if high fees or rewards you won't use are part of the reason you no longer love a credit card, consider calling the issuer to see if you can downgrade your account to one that is a better fit for you. That way you can keep your credit history and have a more useful, less expensive card. You'll also keep your available credit, which is an important factor in your credit utilization ratio and thus your credit score.
4. Pay on Time
Paying on time is essential to keeping accounts in good standing. Cards that are used but not paid as agreed will be closed. Paying late won't necessarily get your cards canceled, but it can do serious damage to your credit standing. Paying on time and in full is ideal because it avoids your having to pay interest while you build a strong record of on-time payments.
A series of missed payments will have already left its mark on your credit score before a card is canceled. Accounts are reported late after 30 days and for every subsequent missed payment thereafter. The toll of multiple late payments adds up too. If you can't pay on time because of a temporary setback, it's a good idea to call the issuer to see if you qualify for a hardship program or some other accommodation.
The Bottom Line
Part of keeping your credit healthy is keeping cards active and in good standing. If a card issuer cancels your account or decreases your credit limit because of inactivity, you may not be notified that your card will be canceled. And card cancellation could hurt your score by:
- Reducing your overall credit limits, which can raise your credit utilization ratio, potentially damaging your score.
- Potentially lowering the average age of your credit accounts, particularly if it's your oldest credit account. While cards closed in good standing may be reported for up to 10 years, not all scoring models include this factor and reporting is voluntary.
Unless there is a compelling reason to close your credit card, you may be better off keeping it open even if you're only using it minimally.
You can check your own credit health with Experian, which offers free access to your credit report and FICO® Score☉ , the credit score used by 90% of top lenders. Checking your own credit score does not affect it, but can give you some insight into your credit health and how to maintain or improve it.