How Often You Should Use Your Credit Card?
If you don't use your credit card regularly, the credit card issuer could close your account due to inactivity. This can hurt your credit score, so it's best to use your card at least every three months.
Why credit card usage matters
While it's not good to use your credit card so much that you end up in debt, using credit responsibly is actually one of the best ways to build your credit score and establish a good credit profile. There are a couple reasons why credit card usage is important for your credit score.
First, having credit cards you use responsibly helps build your available credit, which improves your credit utilization rate — how much credit you have on tap versus how much you're using. As a general rule of thumb, you should aim to keep your credit utilization rate below 30 percent.
For example, imagine you have two credit cards and each one has an $8,000 credit limit ($16,000 total) and a combined $4,000 balance. With this balance, you are only using 25 percent of your available credit, which is good for your credit utilization.
If you close one of your cards, however, this cuts your available credit in half. Now your credit utilization jumps to 50 percent, which could cause your credit score to drop.
Credit usage also plays a role in your credit history, which is important for your credit score. When a credit card issuer closes your account due to inactivity, this can deprive you of credit history, which can damage your score.
Depending on the credit scoring model a creditor uses, closing old credit accounts can have a big impact on your score. For example, some creditors determine credit history by using the average age of all your cards.
For instance, if you have one card that is eight years old and another that is two years old, your average credit history is five years. If you close the first card, your credit history shortens to just two years.
How often should I use my credit card to keep it active?
As a general rule, you should try to use your credit cards once every three months or so. This keeps cards active with most issuers and helps reduce the risk of an issuer closing your account due to inactivity.
Keep in mind that every credit card company is different, so you should check with your issuer to determine what it considers an inactive account and how long an account must go unused before it's closed.
Some credit card issuers have a broad definition of "activity" and will keep an account open as long as you make purchases, do a balance transfer, or even charge $1 every few months. One exception is Citi, which only counts new purchases as activity.
How long will a credit card stay active without use?
Here is how long some of the major credit card issuers consider an account active and how much time has to pass before they will close an account.
American Express - American Express doesn't state an explicit timeframe for closing accounts due to inactivity. If they see that your account has been inactive for a long period of time, they will contact you before closing it.
Barclays - If you have a Barclaycard, you must use it at least once every three months, as Barclays closes accounts after three months of inactivity and they don't notify cardholders beforehand.
Capital One - Capital One closes accounts after one year of inactivity. They will contact you if your account is in danger of being closed.
Chase - If you have a Chase card, you can go one year before your account is closed for inactivity. Chase will notify you before it shuts down your account.
Citi - Citi will close inactive accounts after 24 months, and they don't notify account holders in advance. They are one of the few credit card issuers that only counts purchases as activity for purposes of keeping an account active.
Discover - Discover doesn't state any specific timeframe for inactive accounts, but they will let you know if your account is scheduled to close so you can take action if you wish to keep it open.
US Bank - US Bank doesn't state how long an account must be inactive before it gets shut down. Some cardholders say they received a notice before US Bank closed their account, while others say their account was shut down without any warning.
Wells Fargo - Wells Fargo will shut down an inactive account after six months, but it sends a notification letter to the account holder beforehand.
Credit card companies change their policies from time to time, so it's a good idea to check with your card issuer to make sure you know the most up to date policy. To be safe, however, you should make an effort to use your card at least once every three months.
Should I use my credit card for everything?
Some finance experts recommend using your credit card as much as possible. If you're disciplined enough to avoid overspending, there are several benefits to using your credit card on a regular basis.
1. Build credit
Perhaps the biggest benefit of using your card often is seeing your credit score go up. If you use your card for everything and pay off the full balance each month, you improve your payment history.
Your payment history accounts for 35 percent of your credit score, making it the single most important factor in determining your score. If you're trying to repair your credit, using your credit card and paying it off on time every month is an effective strategy.
2. Get rewards
Some credit cards offer lucrative rewards programs that can put free cash or other perks in your pocket. For example, some cards offer 2 percent cash back on purchases, while others match every point you earn.
However, it's important to stick to your budget when using your credit card to pay bills. Using your credit card responsibly is critical so you don't rack up unnecessary debt.
3. Take advantage of consumer protections
Unlike cash, credit typically comes with a number of consumer protections. For example, many credit card issuers safeguard you against fraud, while others give account holders things like purchase protection and extended warranties.
If you use a credit card for travel, you might even enjoy trip cancellation insurance, lost baggage reimbursement, and travel-related accident insurance coverage.
You don't get this type of protection when you pay bills with cash. However, it's important to make sure you pay your credit card off each month to avoid racking up interest.
What happens if I don’t use my credit card for a long time?
What happens when you don't use your credit card depends on how long you go without making a purchase and what kind of card you have. You can probably let a few months go by without worrying about your card issuer closing your account, but it's best to avoid letting your card stay inactive for six months or more.
In addition to closing your account, some card issuers will cancel out any points, miles, or cash back rewards you have accumulated if your account remains inactive for too long. Other credit card companies will simply close your account without notifying you.
If this happens, you could lose valuable credit history and shrink your available credit — both of which can hurt your credit score.
One thing you don't have to worry about, however, are any so-called inactivity fees. These types of charges are prohibited by federal law.
Why do credit card issuers close cards for inactivity?
When you use your credit card, the credit card company makes a profit. This can come in the form of interest if you run a balance, or through fees the card issuer collects from merchants.
If you stop using your card altogether, the credit card issuer stops making money. Without any benefit on its end, the card issuer may decide it's not worth keeping your account open.
Do unused credit cards hurt your score?
Having an unused credit card won't hurt your credit score. On the contrary, it will probably help it.
Your credit score is based on five factors that include your credit utilization and your credit history. Credit utilization makes up 30 percent of your score, and credit history (how long you have used credit) accounts for 15 percent.
When you close unused credit card accounts, you deprive yourself of credit history. Closing a card can also hurt your credit utilization, as doing so shrinks your available credit.
However, there are circumstances in which it probably makes sense to close an unused credit card. For example, if your card comes with an annual fee, monthly service charge, or other fees it might be best to close it and save the money.
Should I keep a credit card open with zero balance?
It's okay to have a $0 balance on your credit card if you're using it and paying it off each month. However, a $0 balance on an inactive card could hurt you.
This is because your card issuer might stop reporting your card activity to the credit bureaus if your account sits at a $0 balance for a long period of time. Without any account activity on your credit report, potential lenders won't be able to determine if you're a responsible credit user and may decline to extend you credit as a result.
To avoid this, it's better to make a few small purchases from time to time and then pay them off. This keeps your account active so your card issuer updates your account activity with the credit bureaus.
3 ways to keep your credit card active
You don't have to spend a lot to keep your credit card active. Even if you don't want to use your card for everything, there are several things you can do to keep your card issuer from closing your account.
1. Make small purchases
If you want to keep a card open without really using it, keep it in your wallet for an occasional small purchase. For example, use it to buy lunch once a month or fill up your car every now and then.
You don't have to make expensive purchases to maintain an active account. The credit card issuer doesn't care how much you charge as long as you're charging something.
2. Set up a recurring charge
Sometimes out of sight is out of mind. If you throw a credit card in your junk drawer you might forget to use it — and your card issuer might close it.
To stop this from happening, set up a modest recurring charge on your card. Look for a bill that accepts autopay, such as a utility provider or other account that charges you by the month.
This keeps your card active without any effort on your part. If you do this, however, make sure you remember to pay your credit card bill each month.
3. Designate your card as your online shopping card
If you do a lot of online shopping, make your card your primary form of payment. This way, you don't have to carry it with you or worry about pulling it out when you're in stores or paying bills.
This keeps your account active and helps you keep track of how much you're charging. These days, most people rarely go more than three months without buying something online, so designating your card as your online shopping payment method should keep your account active.
It's important to use credit responsibly, but it's also important to use your card often enough to keep it active. As long as you're making small purchases at least once every few months, your card can help you build credit.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.