Just because you have a credit card does not mean you have an obligation to use it. In fact, you may have applied for a credit card with the idea that you’ll use it sparingly, such as in the event of an emergency.
Even though you don’t have to use your credit card, there are some things to keep in mind if this is the approach you’re going to take. Here are several points of consideration:
1. You could still have a balance
Just because you put your credit card away doesn’t mean that your balance will disappear. If you have a balance, you must make the minimum payment — at the least — until it is gone. Failure to do so will result in a red mark on your credit report.
2. Inactivity could result in a closed account
The period of inactivity before closing a credit card account varies from one issuer to the next. If you’re concerned about this, contact your company and ask them if inactivity will have any impact on the status of your account.
3. Reward points may expire
If you have reward points attached to your credit card account, make sure you know exactly when they expire. It’s easy to lose track if you stop using your credit card for an extended period.
Note: A cashback credit card may have an expiration date on when you can request the funds that are due to you.
4. You’ll still have to pay the annual fee (if your card has one)
If your credit card has an annual fee, you’re required by the terms and conditions of your agreement to pay it. This holds true even if you don’t use your card during that specific period.
This one detail may be reason enough to close your credit card account. There’s no point in paying an annual fee for a card that you don’t use. Of course, be careful about closing your account as it could harm your credit score.
You should always have a clear idea of how you will use your credit card. And of course, you should also understand when it’s a good idea to opt for another form of payment.
If you have a credit card that you don’t use, it doesn’t mean something bad will happen. Just make sure you’re aware of the four points above and the potential impact of each.