Do Credit Cards Expire or Close Due to Inactivity?

Credit cards can expire or close due to inactivity, but it's not always a straightforward process.

In general, credit card issuers have a certain period of time to contact you before closing your account, which is usually around 90 to 120 days.

You'll typically receive a notification from your credit card issuer if they're considering closing your account due to inactivity.

On a similar theme: Can You Close Credit Cards with a Balance

Your credit card account may get closed if you don't use it for a long period of time, and the exact length of time varies among issuers.

Card issuers aren't required to give notice of a looming deactivation, but one purchase using the card can keep the account alive.

A closed account can have a negative impact on credit scores, especially for those with low overall credit limits.

Closing your credit card can have some unexpected effects on your rewards. Depending on the card you have, your rewards may be immediately forfeited or credited to your account as a statement credit.

Recommended read: How to Account for Credit Card Rewards

You should refer to your cardmember agreement to understand the specifics, as the terms vary by issuer. This is why it's essential to review your agreement before making any decisions.

If you have a co-branded card with an airline or hotel chain, the points you've earned will typically be stored with that brand's loyalty program. This means you can still access your rewards through the airline or hotel program.

However, if you close your card, the rewards you've earned may still be forfeited if they haven't been transferred to the airline or hotel program yet.

If you don't use your credit card for a long period, your card issuer may close the account. This can happen even if you don't have a balance to pay off.

Card issuers don't have to give you notice before closing your account, so it's essential to stay on top of your card's billing statements and notifications. One purchase using the card can keep the account alive, but it's not a guarantee.

A closed account can have a negative impact on your credit score, especially if you have low overall credit limits. This is because the length of your credit history makes up 15% of your credit score.

Your oldest lines of credit are particularly important, as they contribute to the age of your credit. A closed account will remain on your credit report for a period of time, but it won't continue to age, and will eventually fall off.

Related reading: Will Bank of America Reopen a Closed Credit Card Account

If you're considering closing a credit card, there are some alternatives to consider. You can keep your card open, but use it sparingly, which will help you avoid having the issuer close it for inactivity.

One way to do this is to use your old card for a regular monthly bill, which will keep it active and help your credit history. You can also switch your card to a different one while keeping your credit history intact.

Recommended read: Do Credit Cards Help Your Credit Score

If you have a high annual fee card or one with a high interest rate, you can ask your issuer for a lower annual fee or interest rate. Many issuers are willing to work with you, especially if you have a good relationship.

Opening a new card before closing your old one is a good idea, as it will give you a new credit line that will protect your credit utilization ratio.

Here are some alternatives to closing a credit card:

A closed credit card can negatively impact your credit score for several reasons. Having a high credit utilization ratio can decrease your overall credit score.

Your credit utilization ratio accounts for 30% of your credit score, and keeping it around 30% or less of your available credit is best. This means if you have a credit limit of $1,000, try to keep your balance below $300.

A closed credit card decreases the amount of available credit, which raises your credit utilization ratio. For example, if you have two credit cards with a combined credit limit of $2,000 and one card is deactivated, your credit utilization shoots up to 50% if you still have a balance of $500.

Closed credit accounts stay on your credit report for up to 10 years, and if you had missed payments on the account before it was closed, those missteps remain on the account for seven years. This can further negatively impact your credit score.

Your credit report has a long memory, so it's essential to keep your credit cards active by using them just often enough to keep them active. You could use the card to automatically pay a recurring bill, such as your gym membership or a subscription.

Recommended read: How Long Do Credit Cards Stay on Your Credit Report

If you're wondering if your credit card will close if you don't use it, the answer is yes, but there are ways to prevent it.

You can keep your card open by using it sparingly, such as for a regular monthly bill, to keep it active. This will help you avoid your issuer closing it for inactivity.

If you're set on closing your old card, consider applying for a new one first to minimize the impact on your credit score. A new card will give you a fresh credit line to protect your credit utilization ratio.

Card issuers are not required to give notice of a looming deactivation, so it's essential to stay on top of your account activity. One purchase using the card should be enough to keep the account alive.

If your credit card is closed due to inactivity, you can try to reopen it, but the issuer is under no obligation to reestablish the account. You may be able to negotiate to have the card reopened if you act fast.

To keep your credit score intact, it's a good idea to maintain your oldest lines of credit, as the length of your credit history makes up 15% of your credit score. A closed account won't immediately impact the age of your credit, but those accounts won't continue to age and will eventually fall off your credit report.

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Here are some alternatives to closing a credit card:

You can also consider downgrading your card to a no-fee card if you no longer want to pay annual fees on a card you don't use often.

If you're wondering whether to close a credit card you never use, consider this: it might be okay to close it if it's not your oldest card account, your overall credit utilization rate won't go over 30%, and there's no clear incentive to keep the card, such as rewards or a low interest rate.

To determine whether to keep or close a credit card, think about the incentives it offers. If there's no cash-back potential or travel points to be used, and you're not risking a major hit to your credit score, you can safely shut it down.

You can also consider switching to a new card offering a better incentive, like a welcome bonus or an introductory 0% APR. This can be a great way to upgrade your credit card game without closing an old account.

For another approach, see: Default Rate on Credit Cards

In some cases, you might be able to have your issuer switch your credit card to a different card while keeping your credit history intact. This could allow you to swap a high annual fee card for a lower annual fee card, or find a card that better fits your spending habits.

If you do decide to close a credit card, it's a good idea to open a new card first. This will help minimize the impact on your credit score, as the hard inquiry will only knock a few points off your score for a little while.

Here are some scenarios where it's okay to close a credit card: