Why You Should Keep Your Credit Cards Active
Keeping your cards active ensures you build long histories, which factors into your credit score.
Ellen B. Kennedy
Keeping your credit cards active, even by making one small, monthly purchase, may not seem important. And if you’re digging out of debt or struggling to keep your spending in check, minimizing credit card usage may be the best choice for your overall financial health. Otherwise, consider putting any standard or rewards credit cards that you haven’t used in a while into the rotation for making purchases.
The reason? If your credit card is inactive for a long period — anywhere from about six months to three years, says Ted Rossman, senior industry analyst at Bankrate — the card issuer may close it or reduce your credit limit. That could hurt your credit score.
Why keep your credit cards active?
In order to achieve or maintain a good credit score, you need to monitor your credit-utilization ratio. It’s calculated by dividing your credit card balances (the total amount you owe) by your card limits (both on individual cards and in the aggregate across all your accounts) and reflected as a percentage. Generally, the lower your utilization ratio, the better for your score, and you should try to keep utilization to no more than 30%.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
One way to glance at your utilization is to use credit monitoring services like myFico. They notify you of any changes to your credit reports, such as shifts in balances, new accounts opened or credit inquiries.
If the available credit on one of your cards is reduced or disappears, the utilization ratio calculated across all of your accounts could increase if you have balances on other credit cards. If your card issuer reduces your credit limit, Rossman suggests asking the issuer to restore it to the previous limit.
Making a small purchase with your credit card even just once every few months can help keep the account active. That may be a good strategy for a card that you’d rather not use often — say, because it offers rewards that are inferior to those your other cards provide.
An easy way to achieve this is to set up that credit card for everyday purchases, like streaming, groceries or gas. Using it to charge items then paying them off before interest accrues shows lenders you're responsibly using your card. Not only will this keep your card active, this approach can improve your credit score in time.
If your card is closed
The company that issued your credit card may not warn you before closing your card due to inactivity. Credit card closure can harm your credit score, so you'll need to devise a strategy to get back on track.
Your priority should be boosting your credit score and ensuring you have a system to monitor your cards and their payment due dates. Read more about what to do if your credit card is closed.
Another option is to reach out to the lender. Ask them for the reason why they closed the card and see if there are any steps to rectify the situation.
Read More
-
The Rule of Compounding: Why Time Is an Investor's Best FriendDescribed as both a "miracle" and a "wonder," compound interest is simply a function of time.
-
4 Great Tools to DIY Your Own Financial PlanSmart Savings Several tools picked out by Kiplinger that DIYers can use to make their own financial plan.
-
The 7-Month Deadline That Sets Your Lifetime Medicare PremiumsUnderstanding Medicare enrollment is crucial, as missing deadlines can lead to permanent late enrollment penalties and gaps in coverage.
-
4 Great Tools to DIY Your Own Financial Plan
Smart Savings Several tools picked out by Kiplinger that DIYers can use to make their own financial plan.
-
The 7-Month Deadline That Determines Your Lifetime Medicare Premiums
Understanding Medicare enrollment is crucial, as missing deadlines can lead to permanent late enrollment penalties and gaps in coverage.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
Where to Store Your Cash in 2026Set yourself up for success with these strategies.
-
I'm a Financial Adviser: The Fed's Rate Cuts Could Have Impacts You Might Not AnticipateUnderstanding how lower interest rates could impact your wallet can help you determine the right financial moves to make.
-
My Teen Crashed His Car, and Now Our Insurance Has Tripled. What Now?Dealing with the costly aftermath of a teen car accident is stressful. Here are your options for navigating it.
-
My First $1 Million: Retired In-House Corporate Lawyer, 74, MidwestEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
I'm an Insurance Pro: Going Without Life Insurance Is Like Driving Without a Seat Belt Because You Don't Plan to CrashLife insurance is that boring-but-crucial thing you really need to get now so that your family doesn't have to launch a GoFundMe when you're gone.
