Will Your Bank Cancel or Reduce Limits on Unused Debit or Credit Cards?

Due to the increasing costs associated with maintaining inactive accounts, many banks and credit card issuers have implemented dormancy policies. These policies are designed to ensure that accounts continue to be economically viable for the financial institutions. If you haven’t used your debit or credit card for an extended period, you might be wondering what will happen to your account and whether it might be deactivated or have its limits reduced. This article explores the potential consequences of inactivity and provides advice on how to keep your card active.

Understanding Bank Dormancy Policies

Banks actively monitor their accounts for any signs of inactivity. If an account has not been used for an extended period (typically ranging from 12 months to two years), it can cost the bank money to maintain it. To minimize these costs, banks often have the right to cancel the account or reduce its limits. If the account is not being used, it does not generate income for the bank, which can be a significant factor in deciding whether to keep the account open.

Financial Implications of Unused Cards

The inactivity of a card can lead to several financial implications. For a credit card, the most significant risk is that the bank may cancel the card, cutting off your access to the credit line. For a debit card, the account might be canceled, and your funds could no longer be accessible. Even if the card isn’t canceled, you might face reduced credit limits, making it more difficult to use your credit card for future transactions.

Protecting Your Cards from Inactivity

To prevent your cards from becoming inactive, it’s crucial to use them regularly. Here are some strategies to ensure your cards remain active:

Plan a Regular Usage Day: Choose a day of the year, such as the first day of the month or your birthday, and make sure to use your card on this day. This habit can help you remember to use your card and maintain its activity. Use Online Services: Many people use online banking services, which often involve logging in and performing a transaction. Even a small purchase can help keep your account active. If you haven’t used your card for a long time, consider logging in at least once a year to perform a small transaction. Set App Reminders: Consider setting up reminders on your phone or calendar to use your cards. This can help you remember to use your card and ensure it remains active. Renew Credit Limits Regularly: If your bank offers the option to renew your credit limit, do so every year. This can help ensure that your card remains active and that you have a higher credit limit available.

Conclusion

In summary, if you don’t use your debit or credit cards for a long time, banks may cancel your card or reduce its limits. To avoid this, it’s advisable to use your cards regularly, even if the transactions are small. By staying active, you can maintain access to your funds and continue to enjoy the benefits of your cards without the risk of deactivation or reduced limits. Always ensure you follow your bank's policies and best practices to keep your accounts and cards in good standing.