What Happens if You Stop Using Your Credit Card?

You may not like the answer.

There may come a point when you start to contemplate whether it makes sense to keep an old credit card account open. It may be that although you've had that card for years, you've recently gotten approved for a new one that comes with a better rewards program.

In that scenario, your first inclination may be to cancel that credit card rather than let it sit in your wallet. But doing so isn't necessarily the best move for your credit score.

Your credit score is calculated based on different factors, but closing an old credit card could impact two of them: credit utilization and the length of your credit history.

Your credit utilization ratio speaks to how much of your total credit card limit you're using at once. Canceling a credit card is apt to reduce your total credit limit, which could drive your utilization ratio into unfavorable territory.

Meanwhile, if you close a credit card you've had open for many years, it could shorten the length of your credit history. That, too, could cause credit score damage.

As such, it could be a better idea to just hang onto an old credit card rather than close your account. But if you stop using that card altogether, you might run into some issues.

When you don't use your credit card at all

It's one thing to hang onto an old credit card and swipe it every three to four months to keep your account active. It's another thing to not use that credit card at all.

If you go the latter route, Experian says that you can expect your credit card company to eventually do one of two things: reduce your credit limit, or close your account entirely. Both of these things have the potential to harm your credit score, as we just discussed.

Now, there's no standard time frame credit card companies follow for taking these steps. Yours might decide to close your account if you haven't made a purchase on your credit card in a year. Another company might wait less time or more.

Also, your credit card company may not even give you a warning that it's about to slash your credit limit or cancel your card. So if you're going to leave that card unused, that's something to be aware of.

It's good to keep an old account active

Closing an old credit card might hurt your credit score. But not using that card at all isn't a great solution, either. You may, instead, want to use that card every three to four months for a small purchase.

In doing so, you might miss out on the chance to snag better rewards elsewhere. But that loss may be minimal.

Say you're hanging onto an old credit card that only gives you 1% cash back on gas purchases, whereas your newest card gives you 3% back. If you use your old card for $100 worth of gas fill-ups during the year, it means that instead of getting $3 back, you'll get $1 back. All told, that $2 difference could help keep your credit score in good shape, so it's probably worth making that sacrifice.