Is a Credit Card Closed if Unused for Over a Year?
Do credit card companies close your credit card if it is not used for a long time? The answer depends on the type of credit card you have and the policies of the issuing bank.
Credit Cards with Annual Fees
For credit cards with an annual fee, the answer is generally no. As long as you are paying the annual fee every year, the bank will keep the credit card open. It may be a wise idea to choose a card with a low annual fee if you require an emergency card.
No-Fee Credit Cards
If your credit card has no annual fee and you don't use it, there is a possibility that the bank will close it after a period of inactivity. Typically, unused credit cards are likely to be closed after a year or two. However, to maintain the card's status, you could consider linking it to a subscription service such as streaming and make the payments regularly.
Store Credit Cards
Store credit cards, such as those issued by Target, Best Buy, and other retailers, may have different policies regarding inactivity. Unlike general credit cards, store cards are more likely to be closed if they are not used over an extended period of time. Different stores have different policies, so it's important to review these rules carefully.
Consequences of Inactivity
The bank may close an unattended account as a safety measure. Unused credit cards can be subject to fraudulent activities, and it is better for the bank to close such accounts to prevent unauthorized access.
Protecting Your Credit
To keep your accounts open, it's a good idea to use your credit card occasionally. This will inform the bank that you are still capable of paying your billing statements. Most people only need one or two multipurpose cards accepted universally. Staying active with your credit card can also help maintain your credit score.
It's important to note that it costs the issuing bank money to reserve capital for a card that is earning no income for them. Therefore, the bank has the right to terminate the account. Make sure to read the fine print in the application terms to understand the conditions and policies.
In Summary
The decision to close an unused credit card depends on the type of card and the bank's policies. While no-fee general credit cards are more likely to be closed for inactivity, store cards may have stricter policies. To keep your credit card open, make regular payments, or use it occasionally to inform the bank of your financial activity.