Do Credit Cards Cancel Themselves? What You Need To Know

Credit cards are a convenient way to make purchases and manage expenses. However if you don’t use a credit card for an extended period, the issuer may cancel it due to inactivity. Here’s what you need to know about credit cards canceling themselves and how it can impact your finances.

How Long Before a Credit Card is Canceled Due to Inactivity?

Most credit card companies will consider an account inactive if it hasn’t been used for at least 12 months in a row. Activity includes all of the things that can be done with the card, like purchases, balance transfers, cash advances, payments, and fees.

Some issuers may cancel a card for inactivity sooner than 12 months, while others may wait longer before closing the account The specific timeframe can vary from 6 months up to 24 months depending on the issuer.

The time frame for inactivity starts from the date you last used the card, not the date the account was opened. Such as, if you get a new credit card but don’t use it for the first year, it might still be closed for inactivity.

Why Do Credit Card Companies Cancel Inactive Accounts?

There are a few key reasons why issuers close inactive credit card accounts:

• Transaction fees and interest charges don’t bring in any money for the card issuer when the card isn’t being used. By closing old accounts, they can make room for new customers on their credit lines.

• Account maintenance costs: Issuers incur costs for maintaining open accounts, such as customer service, statement generation, and security. Closing inactive cards reduces these operational expenses.

• Credit risk management: Inactive accounts may pose a higher risk for fraudulent transactions or abuse. Shutting down unused cards allows issuers to minimize credit risks.

• Regulatory compliance: Rules like the CARD Act require issuers to monitor accounts for fraud and identity theft. Canceling inactive cards can aid in compliance.

Will I Get Notice if My Card is Canceled?

In most cases, credit card issuers will send an advance notice alerting you if they plan to close your account. However, they aren’t legally required to do so.

Under the CARD Act, you must get 45 days notice of most major changes to your account. But credit card companies have successfully argued in court that closing an inactive account doesn’t fall under this requirement.

So it’s possible for a card to be canceled without any notice due to inactivity. The best way to prevent this is by using your card periodically.

Can I Reopen a Closed Credit Card?

If your account was closed due to inactivity, you may be able to get it reopened by contacting the issuer directly. However, the credit card company is not obligated to reinstate your account.

Some issuers will allow you to reopen a closed card if you ask soon after the closure. But the longer your account has been closed, the less likely they are to reopen it.

Be prepared to have your request declined or go through another application process. And don’t expect to get back any rewards points lost due to the closure.

How Does Closing a Card for Inactivity Affect My Credit?

Having an inactive credit card closed can impact your credit in a few key ways:

• Credit utilization: closing a card lowers your total available credit, which can increase your overall utilization ratio. Higher utilization tends to lower credit scores.

• History of accounts: when an account is closed, it cuts down on the number of accounts you have had overall. A longer history typically helps scores.

• Credit mix: losing a credit card account also decreases your mix of credit types. Having both revolving (credit cards) and installment (loan) accounts boosts scores.

That said, the impact also depends on the overall state of your credit profile. For instance, someone with excellent credit and low utilization may only see a minor effect from a closed card.

Tips to Avoid Having a Card Canceled for Inactivity

Here are some tips to make sure your credit cards remain active and avoid closure:

• Use each of your cards at least once every 6-12 months by making a small purchase. Set a reminder on your calendar if needed.

• Enroll in autopay to have a small recurring bill like a streaming service or monthly subscription charged to the card.

• Use inactive cards for occasional expenses like gas fill ups, grocery trips, or dining out.

• When opening new cards, don’t neglect your older accounts. Put them to occasional use.

• If traveling, swap an inactive card into your wallet instead of your everyday spender.

• If you have an annual fee card you no longer want, ask the issuer to downgrade to a no-fee version.

• Check your credit report regularly for any closed accounts you weren’t aware of.

• Contact issuers before periods of expected inactivity (like deployments) to avoid closure.

• Build credit with new accounts so any closures have less impact on your credit scores.

What to Do if Your Card is Already Closed

If you discover that your credit card was already canceled due to inactivity, here are some tips on what to do next:

• Contact the issuer immediately and request they reopen the closed account. Be polite yet firm.

• Review your credit reports to see when it was closed and verify if it’s reported as a closed account in good standing.

• Assess your current credit situation to gauge if the closure significantly impacted your credit scores or utilization.

• Shift everyday spending to your next oldest credit card to keep those longstanding accounts active.

• Apply for a new card only if you need to in order to rebuild your available credit or score. Too many new accounts can also lower scores.

• If it was closed long ago, the focus should be on continuing to build your credit with existing and new accounts.

• Consider asking issuers to periodically report your inactive, open accounts to the credit bureaus if permitted to keep them active on your reports.

The Bottom Line

Credit cards closing themselves due to inactivity is a risk if you don’t use your accounts periodically. Be diligent about avoiding long periods of inactivity by putting occasional charges on the card. Check your credit reports to make sure unused cards aren’t unexpectedly closed without your knowledge. With some preventive care, you can keep your cards actively open for the long haul.