One question I’m often asked is if credit card issuers close card accounts due to inactivity. In other words, could your card be canceled if you don’t put any spending on it? I figure it’s time to revisit this topic in light of a recent experience.
Many of us into the miles & points game have a lot of credit cards — for example, personally, I have over a couple dozen cards. There are different reasons why I hold onto cards.
Some cards, like the Chase Sapphire Reserve® (review) and Ink Business Preferred® Credit Card (review), are worth having for the excellent bonus categories they offer for everyday spending.
Other cards, like the World of Hyatt Credit Card (review), IHG One Rewards Premier Credit Card (review), and Marriott Bonvoy Brilliant® American Express® Card (review), are worth having for the anniversary free night certificates that they offer, which more than justify the annual fees.
But do you actually have to spend money on the cards for them to stay open?
In this post:
Why banks may want to cancel inactive credit cards
Credit card issuers take on a risk when they issue you credit. The way credit card issuers make money is with annual fees, merchants fees (when you buy stuff with your card), and interest charges (which don’t apply if you pay off your balance in full every month).
Ultimately there’s an opportunity cost for card issuers to giving you credit that you’re not utilizing, since they could otherwise be extending that credit to someone who is more likely to spend money on the card.
In theory it’s not unreasonable for a card issuer to want to close your account if you don’t show any activity on a card, especially if it’s a no annual fee card, where there’s limited upside for them (it’s rarer for them to close a card with an annual fee due to inactivity).
Why you want credit cards open (even if you’re not spending on them)
As I hinted at above, there are several reasons it could make sense to have a card open, even if you don’t spend much money on it. Some cards are worth having for the perks that they offer, which more than justify the annual fee.
In other cases, having cards open can actually help your credit score. Your credit score is made up of the following factors:
- 35% of your score is your payment history (the percentage of payments you’ve made on-time)
- 30% of your score is your credit utilization (how much credit you’re using compared to your total limits)
- 15% of your score is your credit age (the average age of your open accounts)
- 10% of your score is the types of credit you use (how many different types of requests for credit you have)
- 10% of your score is your requests for new credit (how many times you’ve applied for credit)
So at least 45% of your credit score (and possibly much more) is positively impacted by having more cards open for a long period of time.
30% of your score is your credit utilization, which measures the total amount of available credit that you’re using. If you have a card with a credit line that you’re not using, then that contributes positively to your credit score, since it lowers your overall credit utilization. In fairness, there are other ways to keep that number low, like paying off your balance before your statement even closes.
Furthermore, 15% of your score is your average credit age, so having some cards open long term contributes positively to that metric.
My experience having cards closed due to lack of activity
Until this week I had never had a card closed due to inactivity. That’s despite the fact that there are some cards that I just don’t spend money on. For example, I’ve had the Alaska Airlines Visa Card for years, since it has a $75 annual fee and offers an annual companion certificate that I find to be more than worthwhile. It has been years since I’ve spent money on the card, but my account is still open.
However, my luck finally changed this week, as Citi closed down my Citi Rewards+® Card (review). This is a no annual fee card that I kept thanks to the 10% rebate it offers on ThankYou points redemptions, but it’s not a card I actually spent money on.
So I’ve finally had a card canceled on me due to inactivity, and unsurprisingly it was a no annual fee card. It does indeed seem that this is much more likely to happen on no annual fee cards than cards with annual fees, since there’s at least some upside for card issuers when you’re being billed an annual fee.
Generally speaking it seems that it’s most common for cards to be closed down when there has been no activity for 12+ months. So it’s not usually that you need to make a charge every month, but at least make one every several months.
Also keep in mind that the issuer may consider your overall relationship with them when deciding whether to shut down a card. In other words, if you have five cards with an issuer and use four regularly, they’d probably be less likely to close down the fifth than if you just have one card and never have any activity on it.
That’s not always the case, though. For example, I’m a big spender on my other Citi cards, but that didn’t stop my one Citi card from being shut down.
Making small purchases could prevent cards being closed
If you are someone who is concerned about your card being closed due to inactivity, the easiest way to prevent the possibility of this is to just make some small charges every few billing cycles.
I don’t think it needs to be every billing cycle, but perhaps a small purchase every quarter would do the trick, just to be on the safe side.
Bottom line
Credit card issuers can close down your cards due to lack of activity, though it’s fairly rare, in my experience. If you want to avoid having your account shut down, then I’d recommend making at least a small purchase every few months or so.
Ultimately having your account closed may not be that high stakes. It matters more if you’ve had the card for a long time and it therefore contributes significantly to your credit score, but otherwise it might not be a huge loss if you’re not using the card anyway.
Have you had a credit card closed due to lack of activity? Do you have a strategy to avoid this happening?
I went through this with Chase. They cancelled my United Airlines card/account when I had almost enough points for a flight I wanted to take.
Then, on a business account, they closed an employee card that had not been used in a year. The employee/contractor does freelance work for me and we did not do much of anything with Covid-19, etc. That was not as aggravating - as it was not the whole account,...
I went through this with Chase. They cancelled my United Airlines card/account when I had almost enough points for a flight I wanted to take.
Then, on a business account, they closed an employee card that had not been used in a year. The employee/contractor does freelance work for me and we did not do much of anything with Covid-19, etc. That was not as aggravating - as it was not the whole account, but just one card. It was a bit embarrassing when I asked the fellow to get some supplies and the card was declined.
What about just going through each qtr and doing $1 amazon gift card loads on each card?
Both US Bank and BofA cancelled inactive $0 AF cards in the past year. They seem to be culling their rolls due to fears that people are going bust during the pandemic.
I don’t have time to use every card (and my wife’s cards) once a year and then remember to pay them all. Good riddance
I had never experienced this either but last month American Express cancelled one of my cards.
For credit cards I don't frequently use, I setup a small recurring charge and with automatic payments, I don't have to worry about anything.
If you don't have a recurring charge you can use, setup a recurring donation to your favorite charity if keeping your card is that important to you.
For bank accounts, it's even easier. I've setup standing instructions to transfer $100 through every one of them, A > B > C >...
For credit cards I don't frequently use, I setup a small recurring charge and with automatic payments, I don't have to worry about anything.
If you don't have a recurring charge you can use, setup a recurring donation to your favorite charity if keeping your card is that important to you.
For bank accounts, it's even easier. I've setup standing instructions to transfer $100 through every one of them, A > B > C > D > A, every 6 months.
It might take a little effort up front, but set it and forget it.
It’s also partially to prevent fraud. Generally, financial institutions will pay for those fraud charges out of pocket and it can take years for them to get those funds recovered—if they ever do. So it makes sense for them to close any potential exposure
Upon joining, COSTCO issues you a combined membership & CITI Visa card presented to enter stores and required for checkout. At brick and mortar locations only VISA cards, credit, debit or gift are accepted and I always pay with a VISA card by another issuer as the rewards are better in my case. Within appx. 6 months was contacted by CITI that card was cancelled due to inactivity, however the combined COSTCO card is still...
Upon joining, COSTCO issues you a combined membership & CITI Visa card presented to enter stores and required for checkout. At brick and mortar locations only VISA cards, credit, debit or gift are accepted and I always pay with a VISA card by another issuer as the rewards are better in my case. Within appx. 6 months was contacted by CITI that card was cancelled due to inactivity, however the combined COSTCO card is still "active" when verifying membership thru magnetic stripe for checkout and I assume the chip for payment has been de-activated.
Both Chase and Citi have done this with no annual fee cards I didn't bother to use. If I remember right, Chase gave notice saying I could prevent closure by using the card whereas Citi did not. I used the Chase card for a small purchase but then a few months later (with no activity on the account) they closed it anyway.
Why do people feel the bank owes you an advance notice that the account will be closed? You have the card, be an adult. Either use it or lose it.
The banks don't need all the unnecessary exposure, especially in unstable economic times. Maybe an app should be developed you can enter your cards (not the whole account number) and it can pull your use from the associated website, then advise you when you haven't used the card in say 12 months.
Synchrony have closed two of my credit cards, with no communication. One was Banana Republic, and I don't think I'd even been inactive very long before I was simply unable to log in to the account online. The other was a furniture shop, and that was probably inactive a few years. Fair enough, but it would have been nice to know in advance, and to be given the chance to keep it if wanted. I...
Synchrony have closed two of my credit cards, with no communication. One was Banana Republic, and I don't think I'd even been inactive very long before I was simply unable to log in to the account online. The other was a furniture shop, and that was probably inactive a few years. Fair enough, but it would have been nice to know in advance, and to be given the chance to keep it if wanted. I lost a Target Redcard account that way too, and that was annoying as it was my oldest account.
My Best Buy card at least gave notice; use the card by this date or we cancel. I bought a gift card to keep that one.
I was thinking that CC companies may close a card after a couple of years of inactivity - maybe they think you died. Although when you have other cards from same bank used every month - obviously you did not die.
Doesn't have to be as often as every quarter.
@Reaper. Fair criticism of my poor choice of words.
In Australia at least, if you are applying for a bank mortgage or loan, the bank adds all the spending limits of every card you hold, whether you have any amounts due or outstanding or not, adds them together and deems the total as part of your overall outstanding debt!
So if you have say, 10 inactive cards with a spending cap of $20,000 each, you suddenly have $200,000 of debt in the eyes...
In Australia at least, if you are applying for a bank mortgage or loan, the bank adds all the spending limits of every card you hold, whether you have any amounts due or outstanding or not, adds them together and deems the total as part of your overall outstanding debt!
So if you have say, 10 inactive cards with a spending cap of $20,000 each, you suddenly have $200,000 of debt in the eyes of the bank. Even though in reality it may be zero!
This is why the average Australian generally has only a few hardworking cards in the wallet.
Also the banks do their best to discourage churning by making unappealing (compared to US banks) sign-up deals with high annual fees.
Lastly, a handful of cards, and churning, does wonders in sending your credit rating through the floor!
Also, Amex is not my favorite card issuer given how customer unfriendly some of their policies are (see their new terms saying customers forfeit their points if their account is past due unless they pay a late fee). However, I do like the Amex offers for this reason -- it provides a compelling reason to put charges on cards I would not otherwise use.
@Adam3438 - That is absolutely true about bank accounts getting closed. A friend of mine had that happen to him with a Capital One savings account -- which he was not withdrawing from regularly because it was his emergency fund that was intended to just sit there in case it was ever needed. He spent months fighting with the State government to get his money returned
@TK - I also had one of my Chase...
@Adam3438 - That is absolutely true about bank accounts getting closed. A friend of mine had that happen to him with a Capital One savings account -- which he was not withdrawing from regularly because it was his emergency fund that was intended to just sit there in case it was ever needed. He spent months fighting with the State government to get his money returned
@TK - I also had one of my Chase Freedom cards closed last year due to inactivity. I had 2 Chase Freedom cards because I was previously a Bank One customer (or some other bank, I might be forgetting the name of it) and when Chase bought their credit card business, they converted my card to a Chase Freedom. I also already had a Chase Freedom via the regular application process. I did not find most quarterly categories were compelling enough to spend $3000 per quarter on, so the extra Chase Freedom was rarely used. They did give me 30 days notice and a chance to keep the card active by using it though
I put things like my gym membership and Netflix on cards I rarely use so I don't have to think about it.
I also have a spreadsheet to keep track of opening date, payment due date, month of last spend on the card and other details.
Citi has closed a card on me in the past. I try and get spend on the various cards I have, if nothing more than a little Amazon reload.
Chase closed my Freedom card in November due to inactivity for one year. $22,000 credit line. I called them in the hopes of having it reactivated, but to no avail. I was NOT happy.
Having a credit card closed would be a pain, but it pales in comparison to to a closed bank account.
In the USA if your checking account is inactive (has money in it, but no deposits/withdrawals for over 1 year) the bank will close the account and turn over the money to the state... it’s crazy I know...
Citi just closed a credit card account of mine, as well!
I had the Citi AA Platinum card since 2003 and hadn't used it for years as I also have the Citi AA World Elite card with Admirals Club access. I switched the Platinum card to the no-fee Double Cash, which I also haven't used.
With no warning, my Double Cash card was cancelled, despite having another active Citi account. I called Citi and...
Citi just closed a credit card account of mine, as well!
I had the Citi AA Platinum card since 2003 and hadn't used it for years as I also have the Citi AA World Elite card with Admirals Club access. I switched the Platinum card to the no-fee Double Cash, which I also haven't used.
With no warning, my Double Cash card was cancelled, despite having another active Citi account. I called Citi and they can "reactivate" it, but it will require a hard credit pull, which is BS in my opinion as I have always paid every bill in full each month.
This has left a really poor taste in my mouth regarding Citi as there was no advanced warning. Now, I'm forced to do a credit pull in order to "reactivate" it as my credit score has dropped (it was my oldest account and I had a very high credit limit).
If given a warning I would have made some purchases to keep the account active, but buyer beware as this seems shady to me....
I’ve been reluctantly spending regularly on my Chase Marriott card this year which I intend to close after redeeming my points which has been impossible during the pandemic. The pandemic has really decreased my card spend this year because half of it is travel related. Looking forward to fully using my cards soon but in the meantime I’m keeping them alive by rotating them for personal use.
@Steve, “If you use your card frequently there is almost no chance it will be closed down due to inactivity.”
If you drink water frequently, there is almost no chance you will suffer from dehydration.
If you use your card frequently there is almost no chance it will be closed down due to inactivity.
How frequently? I've never had an account closed that was only used once or twice a year but this will vary between banks and within a bank depending on market conditions. Because of that I keep to a schedule of charging on every card at least once a quarter and making several small charges rather than...
If you use your card frequently there is almost no chance it will be closed down due to inactivity.
How frequently? I've never had an account closed that was only used once or twice a year but this will vary between banks and within a bank depending on market conditions. Because of that I keep to a schedule of charging on every card at least once a quarter and making several small charges rather than just one.
The suggestion of having two boxes, one for cards that need to be used and another for ones that have been charged is a great one. Empty the to be used box then swap the boxes and start over.
I agree. My friends who have had cards closed due to inactivity are all $0 annual fee cards.
I bought a bottle of coke once to keep my Best Buy store credit card open (my oldest account).
Amazon $1 reload will help