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What happens to my credit if I never use my credit card?

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    Have you ever seen someone on TV put their credit card in a block of ice and in the freezer to avoid using their card? While this is a comical approach to budgeting, it can give you the wrong impression — that using your credit card is inherently a bad thing.

    Actually, not using your card at all may have consequences. In this article, you will learn about:

    • How an unused credit card affects your credit
    • How often you should use your credit card
    • If closing a credit card affects your credit score

    How an unused credit card affects your credit

    If you never use your credit card, you could be facing consequences down the line. Let's say you've stopped using a credit card to make transactions. Months go by, then a year or even longer. Credit card issuers may lower your credit limit due to inactivity before closing.

    Credit card issuers don't need to give you a notice about your closure due to inactivity — they can do this at any time. If your issuer closes your card due to inactivity, your credit score could decrease for a few reasons.

    Credit utilization

    If a card has been closed, it's possible you could be raising your credit utilization ratio. The amount of credit available to you could decrease, meaning that your ratio of how much credit you use compared to your available credit could increase.

    For example, if you had a credit card with a credit limit of $3,000 and it closes, you have $3,000 less going towards your total credit amount. You could be using up more of your credit limit on other cards.

    Because credit utilization is a major factor in generating your credit score, you could see your score drop a few points after your card has been closed.

    Credit age and mix

    Credit age and mix have an effect on your credit score, as they account for about 15% of your score. If a card/account has been open for 10 years, closing it due to inactivity could have more of an impact on your credit score than an account that was open for just one year. This could be due to the fact that you've shown consistent payment history with this card, and the age of this account is older than others, making your average credit age lower.

    A credit card, when used responsibly, can actually help improve your score. Let's go into more detail below.

    Does closing a credit card affect your credit score?

    Whether your credit card is closed by you or your issuer, closing a credit card can have a negative impact on your credit score. As you can see above, both your credit utilization and credit age/mix get impacted when you close an account. How much damage it does to your credit
    score depends on the account and what your current credit score is. On average, closing your credit card account can decrease your credit score by a few points.

    If you're curious about keeping up-to-date on your credit score, you can check it for free by enrolling in Chase Credit Journey®. You can choose to opt into credit monitoring alerts as well, where you can keep track of shifts in your credit score.

    How often should you use your credit card?

    In general, you should use your credit card at least once a quarter (every three months) to keep the card open and active, but more frequently (monthly) if you're looking to improve payment history. The answer to just how often you should use your card to maintain a good
    score comes down to your credit utilization rather than how many transactions you have.

    As stated earlier, this is the ratio of the amount of credit you use to the amount of of credit available to you. Your credit utilization ratio isn't time-dependent — instead of focusing on how frequently you use the card, perhaps focus more on how much of your credit limit you are using.

    Your credit utilization ratio is your guide

    It's important to keep your credit utilization ratio under 30% — this is a healthy balance of using your credit to a reasonable degree. However, never using your credit card could result in a lack of financial data for lenders/bureaus to collect to determine your credit score. In order to get a sense of your reliability and responsibility with money, you need to have your behavior reported to the credit bureaus, such as your ability to make monthly payments.

    Staying at the 30% mark is a good way of monitoring how often you should use your card. It comes down to the total amount of spending on
    your card each month rather than the number of transactions. Even if you use your card to make 100 purchases, those purchases could be for less expensive items and not necessarily using much of your credit limit.

    On the other hand, you could make a few, smaller but more expensive purchases, which eats up a larger amount of your credit. Generally, using your credit card at least once a month can be a good way to help maintain your credit utilization ratio.

    Tips for good credit utilization

    Now that you know how important your credit utilization is to maintaining a good credit score, here are some ways you can help improve it:

    • Make monthly payments on time
    • Ask your lender to increase your credit limit — this is especially true for loyal and responsible individuals who have been with a bank for a long time, but be careful if you consider taking this action as it could result in a hard inquiry or have other adverse impacts
    • Find ways to add supplementary income to improve your debt-to-income ratio
    • Monitor your credit score with Credit Journey®, which can help you keep track of your goals

    Keeping your card active and your credit score healthy

    While we don't need to be freezing our cards in blocks of ice, we shouldn't be overspending on our cards either. Striking a healthy balance with our cards is key to maintaining and improving your credit score.

    We all have our favorite credit card—the go-to one for perks, rewards, etc. While these cards can offer us a lot of additional benefits, we shouldn't forget about all our other cards. Put together, these cards create a full and diverse portfolio that can help create the foundation for a healthy credit score.

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