One question I’m often asked is if credit card issuers close card accounts due to inactivity. In other words, could your card be canceled if you don’t put any spending on it for some amount of time, and is that something to be worried about?
Many of us into the miles & points game have a lot of credit cards — for example, personally, I have over a couple dozen cards. There are different reasons why I hold onto cards:
- Some cards I hold onto for the return on spending that they offer, so obviously those cards aren’t inactive
- Some cards I hold onto because of the great perks they offer even without spending, like hotel credit cards offering annual free night awards
- Some no annual fee cards I hold onto simply because having lots of cards and minimizing your credit utilization is good for your credit score
For the cards you have that you don’t actually spend on, should you be worried about them being shut down? Let’s talk about that…
Why banks may want to cancel inactive credit cards
Credit card issuers take on a risk when they issue you credit. The way credit card issuers make money is with annual fees, merchants fees (when you buy stuff with your card), and interest charges (which don’t apply if you pay off your balance in full every month).
Ultimately there’s an opportunity cost for card issuers to giving you credit that you’re not utilizing, since they could otherwise be extending that credit to someone who is more likely to spend money on the card.
In theory it’s not unreasonable for a card issuer to want to close your account if you don’t show any activity on a card for an extended period of time, especially if it’s a no annual fee card, where there’s limited upside for them (it’s rarer for them to close a card with an annual fee due to inactivity).
Why you may want to keep cards open without spending
As I hinted at above, there are several reasons it could make sense to have a card open, even if you don’t spend much money on it. Some cards are worth having for the perks that they offer, which more than justify the annual fee.
In other cases, having cards open can actually help your credit score. Your credit score is made up of the following factors:
- 35% of your score is your payment history (the percentage of payments you’ve made on-time)
- 30% of your score is your credit utilization (how much credit you’re using compared to your total limits)
- 15% of your score is your credit age (the average age of your open accounts)
- 10% of your score is the types of credit you use (how many different types of requests for credit you have)
- 10% of your score is your requests for new credit (how many times you’ve applied for credit)
So at least 45% of your credit score (and possibly much more) is positively impacted by having more cards open for a long period of time.
30% of your score is your credit utilization, which measures the total amount of available credit that you’re using. If you have a card with a credit line that you’re not using much, then that contributes positively to your credit score, since it lowers your overall credit utilization. In fairness, there are other ways to keep that number low, like paying off your balance before your statement even closes.
Furthermore, 15% of your score is your average credit age, so having some cards open long term contributes positively to that metric.
My experience having cards closed due to lack of activity
In all my years in the credit card “game,” I’ve had a card closed due to inactivity exactly one time. That happened in 2021, when Citi closed a card after I didn’t use it for many months. Funny enough, it wasn’t actually that long of a period during which I didn’t use it.
Generally speaking it seems that it’s most common for cards to be closed down when there has been no activity for 12+ months. So it’s not usually that you need to make a charge every month, but at least make one every several months.
Also keep in mind that the issuer may consider your overall relationship with them when deciding whether to shut down a card. In other words, if you have five cards with an issuer and use four regularly, they’d probably be less likely to close down the fifth than if you just have one card and never have any activity on it.
Generally no annual fee cards are also more likely to be closed down due to inactivity, since there’s at least some upside for card issuers when you’re being billed an annual fee. There does seem to be some randomness to it, though.
Making small purchases prevents cards being closed
If you are someone who is concerned about your card being closed due to inactivity, the easiest way to prevent the possibility of this is to just make some small charges every few billing cycles.
It doesn’t need to be every billing cycle, but perhaps a small purchase every quarter would do the trick, just to be on the safe side.
Bottom line
Credit card issuers can close down your cards due to lack of activity, though it’s fairly rare, in my experience. If you want to avoid having your account shut down, then I’d recommend making at least a small purchase every few months or so.
Ultimately having your account closed may not be that high stakes, so I wouldn’t focus too much on it. But if it is something that worries you, it’s at least worth being aware of easy ways to avoid that happening.
Have you had a credit card closed due to lack of activity? Do you have a strategy to avoid this happening?
