What Will Happen to My Inactive Credit Card
For various reasons, many people apply for credit cards that they later decide not to use. Due to this, when the plastic reaches your hands, the question arises as to what consequences not activating it could imply. Thinking about this uncertainty: What happens if I do not activate my credit card or let it remain as an inactive credit card?
This will depend on the regulations of each bank. Our recommendation is that, before deciding to keep the plastic you received in the drawer, you carefully read the contract of your financial institution. The consequences of not using your credit card can be:
- Automatic activation of the credit card after a certain time, in case the user has not done so.
- Activation by presenting the plastic to pay at a store, without the need to register it.
- Receiving an account statement with maintenance fees
- Generating a record of non-activity in the user’s Credit Bureau.
The Responsibility Factor
A credit card is an excellent financing instrument, as long as it is managed responsibly. If you have one and activate it, use it! Why? Well, this is because you will be charged for maintenance anyway, whether you use it or not. This is an annual charge for possession of it.
The most advisable thing is that when you make a charge on your card you opt for interest-free monthly installments. Many businesses offer this payment method. However, you must do your calculations well. Indeed, the best option is that the monthly payment you will pay is not more than 15% of your monthly income. This adds all the charges that can accumulate in successive simultaneous purchases. If you do not make your payment on time, you could be charged for non-payment, or for delay. If it is too much, charges for collection, expenses will be added.
Points to Consider
There are two points to consider:
- If you are an impulsive person who cannot resist having money in hand, and spends it again and again, perhaps it would be good to forget about the card until you control this issue.
- If, on the contrary, you are a responsible person who knows how to measure or control yourself, the card can help you to avoid carrying cash. You might also benefit from a point or reward system that favors you.
And also there is the possibility of accessing some purchases, in which it is only allowed to do so with a card, especially in online stores. The fact of having good credit is to make your payments on time and, in the future, it will help you to opt for other benefits, such as credit for something important.
Although it is less frequent, some banks, due to security measures, can block or leave your plastic inactive after long periods of inactivity. This is done to avoid unrecognized charges. But it can get complicated if from one moment to another, you want to buy and your purchase is rejected. Remember that financial companies analyze your purchasing behavior to offer you promotions. If you do not have a previous history and unexpectedly want to spend most of your line of credit, you will probably have to confirm your purchase by calling your bank. This situation can cause a delay for you.
Are There Consequences?
It must be said, there are also cases where there are no negative consequences if you simply do not activate your card or leave it as an inactive credit card, regardless of whether you have signed a contract. If you do not use the card, nor activate it, you do not have to pay anything each month. In fact, you do not pay maintenance until the first month of you using it. That is, if you contract the card in January and activate it only in July. Then you should get your account statement approximately in August and make your first payment.
As long as you don’t make purchases, you only pay for maintenance. As long as you don’t activate it, there are no payments to consider. If a long period passes and the card expires, it has no relevance or buying power due to non-use of the card.
The main consequence that you will observe when you stop using your credit card is that some banks may apply fees for non-use. These types of charges are common when the benefit of not charging an annuity is conditioned, since they will request a minimum amount of expense or monthly activity.
To Use Or Not To Use Your Credit Card?
Here are some tips for using your credit card:
- Do not use credit cards to appear to others that you have money, because it is a lie. What you have is the ability to lower your salary at will.
- Do not use credit cards to buy things that are not really necessary.
- Do not use them to pay installments, to buy what you can pay in cash, even if you have to make a little effort.
- Try to pay off your balance in full each month. Or at a minimum make large payments to keep your card balance from getting out of control.
Think for a moment what would happen if you lost your job and, even so, you had to face the responsibility of paying on your credit cards. Would it be of any use to you? Would you then feel a free person without obligations? Or will you have an immense regret for having abused something that could have been an interesting help to you? For some people, it is best to keep it inactive for a while. For others, keeping it active can greatly improve their credit scores.
You will also miss out on unique benefits and rewards as mentioned before. Consider that using a credit card has different purposes, including receiving exclusive benefits that paying in cash does not give you, such as cashback, reward points, electronic money, coupons and offers.
You should not allow your card to stay inactive for too long. In this way, if you are not interested in using your credit card on a regular basis, consider canceling your plastic or prefer annuity-free or basic plastics so as not to pay the associated fees.
An inactive credit card does not mean that the account is closed and we can forget about it, since entities usually charge management and maintenance fees for them.
There are two types of consequences.
- On the one hand, if you have received a card for the first time, but have not activated it, it will not have any use or payment obligations. Likewise, when the expiration period arrives, the card will expire, possibly without being renewed unless requested.
- On the other hand, if you have activated it and you are not using it, then, it is possible that you have to pay maintenance costs. It will depend on the conditions of your contract.
Therefore, make sure to read the fine print. If you want to learn more about credit cards, go to the Goalry platform and over to the Creditry store.
Cheryline Lawson is a personal finance writer who lives in Fort Lauderdale, Florida with her husband and two boys. She has worked as a mortgage broker and loan processor in the most recent past. She shares a lot of her experiencing in financial planning, real estate investing and budget advice with national media outlets like GoBankingRates, Intuit, Bustle, Buzzfeed and CBS News. Ms. Lawson is a graduate of Broward College in Florida. She came into her own as a mortgage broker after realizing so many people need help to get into their first home. She has a passion for helping others, especially those who need financial advice to use in their daily lives.