Why Leaving Your Credit Cards Inactive May Be Dangerous

However, not all of them are usually used on a regular basis. The general rule is to try not to lend too much, so as not to be burdened with crippling debts. That is why it is often an option to put some of your available cards into a drawer and forget about them until the need for more money arises.

However, this approach may be financially dangerous.

Of course, using fewer credit cards means fewer debts, but this out-of-sigh-out-of-mind approach may well lead to trouble. There are two main reasons for staying vigilant about your inactive card.

Beware of fraudulent activity

Most lenders send paper statements stating what amounts of money have been charged this month. It is often the case that these letters go straight to the spam folder or are deleted accidentally. If your mail box is overrun with letters, chances are you will simply overlook the notification that something is going on. And this something is usually not going to benefit your bank account.

Fraudsters prefer to use cards sent to the sidelines, as people are more likely fail to notice fraudulent activity if it is happening not to the main card, but to some other gathering dust on a shelf. Having your data at their disposal, they will lend the money on your behalf, with no intention of paying off this debt. The longer your card remains unattended–both in the virtual and the real world–the higher the chances it will be used fraudulently.

To try to prevent such troubles, check your inactive credit cards regularly, i.e. monthly, and read carefully every notification your bank sends you. They do not do it for nothing – all the information they provide should be taken seriously, lest your ignorance of the situation results in enormous debts, especially if you do not pay attention to your cards for months on end.

Account closure

This problem, which may result from leaving your credit card inactive, is not as serious as the previously mentioned one, but it is another way your finances may take a hit.

If the lender spots a period of inactivity in your history, they can decide to close your account on the grounds that you do not need it. It’s not that such an event can harm you at the drop of a hat, since your failure to use the card means you really can do without it, but it may affect your financial issues in the long run.

The thing is, every source of credit you have contributes to your credit utilization ratio. It is a parameter used to show how much of the money you are able to lend you actually lend, i.e. how you use the resources provided, if only potentially, by banks. It goes without saying that the bigger the pool of money you can use and the less money you do use, the better the score.

The reason why lenders opt for closing your account in such cases is that without information on your current income situation, they do not know whether having you as a client poses a risk. Hence the closure.

It is difficult to say how much time of inactivity your lender may consider too much. Some of them close accounts after only six months, so be vigilant about what is happening to your bank accounts.

What to do

If you want all your credit cards to be alive and kicking, use them to make small payments regularly. Say, a phone bill will do. The key is consistency – using it once a month is unlikely to result in an account closure. However, there is no way to be on the safe side: there are no strict rules as to how lenders should handle such cases, and all you can do is to use your cards in moderation. Moderation is a virtue, after all, and it applies to financial issues as well.

As to being vigilant against fraudsters, do to let your inactive cards live their own lives. Check your mail carefully and regularly. Besides, do not leave your cards unattended and never share your personal data on the Internet.

 

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