What to Know If Your Credit Card Is Closed Due to Inactivity

Having a card account closed by the issuer can hurt your credit scores. Use your cards regularly to avoid it.

Sara Rathner, Lindsay KonskoSeptember 15, 2020
Credit Card Closed Due to Inactivity?

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If you don't use a credit card for a year or more, the issuer may decide to close the account. In fact, inactivity is one of the most common reasons for account cancellations.

When your account is idle, the card issuer makes no money from transaction fees paid by merchants or from interest if you carry a balance. Credit card issuers have only so much credit they’re able to extend to their customers, so they may cancel your account and give that line of credit to someone who will use it.

What’s more, credit card companies aren’t required to give any notice. Although the Credit Card Act of 2009 says creditors must give customers 45 days' notice of major changes to the terms of their accounts, courts have decided that a card cancellation caused by inactivity doesn’t count.

If my credit card is closed due to inactivity, can I reopen it?

Credit card companies are under no obligation to reestablish a canceled account. Moreover, if you lost any accumulated rewards when the account was canceled, you probably won't get them back.

Get in touch with your card issuer right away and ask to have it reinstated. If you act fast, you may be able to negotiate to have the card reopened. But be prepared for bad news.

Protect the card or cards you still have open. Use each card at least every few months to keep the account active.

Nerd tip: Set it on autopilot: Put a small recurring charge, like a subscription for a streaming service, onto a card you no longer use often. Then, set up autopay so you know the bill will be paid in full and on time. Just be sure you have the funds in your bank account to cover the payment each month to avoid overdraft fees.

Determine if your open cards are still right for you. It may no longer be worth it for you to pay annual fees on a card you don’t use often. If you’d like to keep that account active, though, one option is to downgrade your card to another no-fee card that the credit card issuer offers.

How will this affect my credit score?

A closed account can affect several factors that help determine your credit scores:

  • Credit utilization: Your credit utilization ratio is the percentage of your available credit that you're currently using, and in general, the lower the better. Say you have $5,000 in available credit across several credit cards, and current balances totaling $1,500. Your utilization is 30%, which is about as high as you should let it go under usual circumstances. Now say an issuer cancels an inactive account with a $2,000 credit line. Your utilization shoots up to 50%, and your scores likely suffer.

  • Average age of accounts: If the credit card that got canceled is one that you've had for a long time, that will affect the average age of your active accounts, which is a factor in the portion of your score affected by length of credit history. Generally, longer is better.

  • Types of credit: This is also known as your "credit mix," and ideally you'll have both installment accounts (loans with a set number of equal monthly payments) as well as credit card accounts. If the account that got canceled was your only credit card, it could ding your scores.

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