Sometimes, when we have multiple credit cards, we stop using one or two of them completely. After getting a credit card activated, you must use it to avoid getting it blocked. At first, it sounds nice just to use the card that you like and avoid the others. But it will hurt your credit score and reward history significantly. Building a solid credit rating after this will take a lot of time and effort. Let’s dig into a few more facts that will occur if you stop using a credit card.
What Will Happen If I Stop Using a Credit Card?
1. Credit Score Will Adversely Affected
Before closing a credit card, the issuers usually send reminders about its inactivity and check if you want to keep it active. Shutting down a card, especially one with a long history, might hurt your credit score.
This happens because having a long relationship with a bank shows you’re good at paying on time, handling deposits, and managing money. Closing that credit card might remove these positive money habits from your credit history.
2. Reduced Credit Limit
Your Credit Utilization Rate (CUR) shows how much of your available credit you use. When you’re not using your credit cards much, the CUR stays low, which is good for your credit score. But if you have a credit card with zero activity, it might not prove that you’re good at managing credit. Lenders could see it as not having enough experience with credit, which might affect your chances of getting approved for loans later on.
3. Extra Charges Will be Levied
If you don’t use your credit card for a long time, some companies might charge you fees for being inactive. These fees are meant to encourage people to use their cards regularly. They could be charged every year or after a certain period of not using the card. To avoid these fees, make sure you know what your credit card company’s rules are.
4. Credit Card Closure
If you don’t use your credit card for a long time, the company might close it. This won’t hurt your credit score right away, but it means you’ll have less credit available overall.
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5. You Will Lose Rewards and Benefits
Credit cards often bring with them enticing rewards programs, cashback offers, and a range of benefits like free lounge access and other perks. Not tapping into these goodies means you’re missing out on a potpourri of rewards and advantages.
