What happens if you don't use your credit card balance?
The bottom line
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
To keep your credit card account open and in good standing, you must pay at least the minimum payment amount indicated on your bill by the due date. Failing to do so can result in late fees, potential damage to your credit score and even having your account closed and turned over to collections.
Key points about: not using your credit card
Your credit card account may be closed due to inactivity if you don't use it. You could overlook fraudulent charges if you're not regularly reviewing your account. If your credit card account is closed, it could negatively impact your credit score.
In most cases, however, it's best to keep unused credit cards open so you benefit from longer credit history and lower credit utilization (as a result of more available credit). You can use the card for occasional small purchases or recurring payments to keep it active as opposed to using it regularly.
Unused credit cards don't make any money -- and an open credit card account costs money to maintain and monitor. Rather than pay for you to not use your card, the card issuer may simply cancel your unused credit card and close the account.
It's possible to charge more than your credit line allows, however. But if you go over your credit limit, your purchase may be approved or denied. If it's approved, you may have to pay fees or a higher interest rate.
If you don't use a credit card for a year or more, the issuer may decide to close the account. In fact, inactivity is one of the most common reasons for account cancellations. When your account is idle, the card issuer makes no money from transaction fees paid by merchants or from interest if you carry a balance.
$500 — When you have a credit limit of $500, ideally your balance is $150 or less. $1,000 —If your credit line is $1,000, this means you should aim for a balance of $300 or less to maintain your credit utilization.
The minimum payment on a $3,000 credit card balance is at least $30, plus any fees, interest, and past-due amounts, if applicable. If you were late making a payment for the previous billing period, the credit card company may also add a late fee on top of your standard minimum payment.
Is it bad to spend too little on credit card?
Is 0% credit utilization bad? In general, using as little of your credit card limits as possible is better for your scores. So logic would suggest that paying off your credit cards early so that a zero balance is reported to the credit bureaus would produce the highest scores.
Most important: Payment history
Your payment history is one of the most important credit scoring factors and can have the biggest impact on your scores. Having a long history of on-time payments is best for your credit scores, while missing a payment could hurt them.
Not using a credit card isn't necessarily a bad thing. However, it can come with some unintended consequences. Although charging inactivity fees is no longer legal, issuers have other options at their disposal — some of which could affect your credit score, your available credit and more.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Credit experts advise against closing credit cards, even when you're not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
What is the 5/24 rule? Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.
If you don't use your credit card, the card issuer may close your account. You are also more susceptible to fraud if you aren't vigilant about checking up on the inactive card, and fraudulent charges can affect your credit rating and finances.
If 180 days go by and you still haven't paid your credit card's minimum payment, the issuer can charge off your account. This means that the creditor closes your account to future purchases and writes your debt off as a loss. You're still responsible for paying the amount owed, though.
An active card can help your credit, but a zero balance is best for your score. June 6, 2024, at 12:06 p.m. Not paying your credit card balance in full will negatively impact your credit score and force you to pay interest.
The bottom line
The lower your balances, the better your score — and a very low balance will keep your financial risks low. But the best way to maintain a high credit score is to pay your balances in full on time, every time.
What happens if I don't use my credit card every month?
WalletHub, Financial Company
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. However, your credit card issuer isn't going to close your account for less than three months of inactivity.
It costs $30 to $50 in fees to transfer a $1,000 balance to a credit card, in most cases, as balance transfer fees on credit cards usually equal 3% to 5% of the amount transferred. Some credit cards even have no balance transfer fee, but it's rare for cards that do this to also have a 0% introductory APR on transfers.
Even if you pay enough each month to pay off your balance in full a few months after maxing out your credit card, you may pay the price of a lower credit score along with the bill. You also run the risk of not paying enough or adding more charges to exceed your limit and end up paying a fee or penalty.
However, one of the most important benefits of this rule is that you can keep more of your income and save. The 20/10 rule follows the logic that no more than 20% of your annual net income should be spent on consumer debt and no more than 10% of your monthly net income should be used to pay debt repayments.
Credit card issuers can close your account due to what's known as "inactivity," meaning you haven't used the card in a certain amount of time — let's say a year or more — and the issuer now assumes you have no use for that account. But if even an account is closed, all is not lost.
