4 Reasons Why You Shouldn’t Keep Any Credit Card Dormant

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Credit cards have played a significant role in changing the way people carry out different transactions. They have provided people with greater convenience, safety, and financial strength as buyers no longer need to wait for their paychecks to make other payments that they wish to do. They have enhanced the consumer experience by providing the convenience of instantly undertaking online transactions and redeeming rewards in just a few seconds. So, it’s no wonder why people carry different credit cards from different providers, such as a slice credit card and an American express card.

However, credit card holders must acknowledge the responsibility that they are entitled to as they get possession of their credit cards. One of the responsibilities includes making purchases every once in a while, so your credit card issuer, such as american express, if you use an american express credit card, doesn’t assume that your card is dormant. In many instances, a credit card service provider may terminate your credit card without prior notice if it is kept unused for a long time. Thus, it becomes your responsibility to make purchases at suitable times.

Letting your credit card stay inactive can have more consequences other than termination of functionality. Keep reading to know what those consequences are.

  1. You may neglect fraudulent transactions: Not using a credit card for a long time easily translates to not monitoring daily transactional activities. It presents a higher risk of you not being able to report any instances of fraud because you won’t even know it has occurred! Consider a situation where you have two cards, an american express and a yes bank credit card, and you don’t use the american express card for a long time. If anybody gets unauthorized access to your card and makes payment through it, you may get surprised by unimaginably high fees being billed to you. Furthermore, your credit score will suffer if you fail to pay the due amount in time.
  2. Your credit score may drop: if one of your cards gets closed due to inactivity and you continue using other cards, your credit score may drop. If a credit card is closed, your credit utilization ratio will increase, and your average account age will decrease. Credit utilization ratio and account age are two factors that are considered for calculating credit scores. If you aren’t familiar with a credit utilization ratio, here’s a simple definition: it is the ratio of the total amount being used to the total amount of credit allowed by the lender. Your credit utilization rate should stay below 30% to maintain a good credit score. You may lose your reward points: If your credit card gets terminated due to inactivity, you will likely lose all the associated reward points. It defies the entire point of owning a credit card, such as a bob credit card

Not using a credit card due to forgetfulness or neglect is nothing new for multiple card holders. While there’s nothing wrong with not using your card for a while, you must stay aware of the time you can go without making a payment.  This duration will differ between providers, so it’s always a good idea to confirm with your service providers to avoid any implications associated with credit card dormancy. Additionally, if you’re sure about letting go of a particular card and your credit score is good enough, it’s better to contact the issuer to terminate your card instead of letting it get deactivated automatically. You can use your dormant card to pay electricity bill as they are periodic payments.