If you have many credit cards sitting around, but if you don’t use them all then they can be closed because of their inactive status. Before you use a card that you haven’t used in some time make sure that the account is still active and in working order. Sometimes it takes just a few months of not using the card and other credit card companies will give you a few years.
There are many reasons the top credit card companies will close these inactive accounts. The biggest reason is because that credit could be given to someone else who will actually use the card instead of letting it just sit in their wallet. If your card is just sitting in your wallet and there is no balance, then there is no interest accumulating and therefore they aren’t making money. Closing an inactive account is merely a business decision and not a personal matter.
The only problem is that sometimes they will inform you in advance that they are closing the account, but most likely they will close the account and then inform you. The only problem with this is that when an account is closed it will affect your credit score.
There are many different ways it can affect your credit score, including regarding the credit utilization ratio. If you had a high limit credit card and it was closed the ratio will go down. This means that the ratio of available credit to the amount debt that you have. This accounts for around 30% of 100 and affects credit score, so it is vital that it is kept under 30% for the optimal score.
It doesn’t necessarily hurt the score that bad if the length of your credit history goes down, unless it is a significant drop. However, remember that throughout the years you will be getting more and more cards and more entries on your history so don’t worry. One day this account closure will just be a blip on the report.
If the card has been closed you can call to the top credit card company and inform them that you wish to have the account remain open. You can even tell them if they open the account again, you will use the card to make a purchase so that they can earn interest. If they won’t reopen the account see about getting the previous credit limit moved over to another card of the same carrier.
The best way to keep the credit card from going inactive and being canceled is to make a purchase every 2 to 3 months, even if it’s just small, on it and pay the bill off immediately. Otherwise, you are at risk of the account being closed and damage being done to your credit score. The purchases can be small, but any sort of charges will help keep the account active and no danger of being closed.
There is hardly anything you can do about an account once it has been closed, so if you don’t want it to close, make sure to take the proper precautions.