Do you have credit cards that you never use? On the one hand, this is good – it means you’re not racking up debt. On the other hand, a significant portion of your credit score is based on how much credit you have available in comparison to how much you’re using. So if you have an unused credit card, the available credit on that account is helping you. If the issuer cancels the unused card, your credit score will suffer.
Does This Apply to Me?
But wait a minute – I have no credit card debt as I use my cards as a convenience only and pay each in full each month. If you're like me, does having an unused credit card cancelled really matter? Actually, it could. Remember – the higher the amount of unused credit you have the better your credit score.
I’ve actually been worrying about this periodically as I have a VISA card that hasn’t been used in many years. It’s through a credit union so I don’t know that I’m in danger of being cancelled but the credit limit on that card is close to one-third of my available credit. Should the card be cancelled, that’s a big hit on my credit-to-debt ratio!
A Simple Solution
Suze Orman addressed this very issue in the November Costco Connection. A gal wrote in about receiving notification that one of her credit cards would be cancelled at the end of the year due to lack of use. Suze’s solution? Contact the card issuer and ask if they’ll keep the card active if it gets used once or twice a month. If so, pay one or two recurring expenses with the card such as the cable bill.
So why don’t I use my credit union issued card currently? Because years ago, every time I got the bill it looked like junk mail and I was afraid I’d toss it accidentally. So I just quit using the card. Fast forward to the present – I’m totally into paperless billing and don't get bills in the mail anymore. I guess it’s time to rethink my credit card usage and maybe use that card for some recurring expense as Suze recommends.