What happens when you stop using your credit cards?
At times we have multiple credit cards, and we only tend to use some while others are kept aside in our wallets. Some may get a credit card and stop using it after they have already got it activated. These habits may sound like having no immediate impact on you, but you may lose out on rewards and lack an opportunity to build a solid credit score.
Keeping your credit cards inactive or not using them can have various consequences and effects on your financial profile. While it may seem like a safe approach to avoid accumulating debt, there are certain implications to consider.
Let us understand what happens when you keep your credit cards inactive:
Before proceeding with the actual closure, credit card issuers typically send multiple notices alerting you to the lack of card usage and inquiring whether you want to maintain the card’s active status. Closing an inactive credit card, especially one with a long-standing history at a bank, can potentially have a negative impact on your credit score.
This is due to the fact that when you maintain a lengthy relationship with a bank, it provides evidence of your consistent punctuality in payments, deposits, withdrawals, and other financial activities. Closing such a credit card may result in the removal of positive financial history from your credit record.
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Your CUR is the proportion of your available credit limit that you use. When you don’t spend on your credit cards, your CUR remains low. A low CUR is good for your credit score as it indicates responsible credit management. However, having a credit card with zero utilisation might not demonstrate your ability to manage credit effectively. Creditors may
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