What Happens If You Don’t Activate Your Credit Card?
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So you've been approved for a credit card, you've received it in the mail, maybe you've even opened the envelope — but what happens if you don't activate it for some reason?
Short term, maybe not much, especially for cards with no annual fee. You could keep the card in your sock drawer, never bothering to remove the "activate online or by phone" sticker, and no one would stop you. The card issuer might send you multiple reminders to activate the account. Eventually, the account will likely be closed for inactivity.
Long term, an account closure could impact your credit scores, but it's really more about what won't happen if you don't activate your credit card. You won't avoid the temporary ding to your credit from applying for it, you won't dodge the annual fee if it charges one, and of course, you won't be able to use your new card — or realize any rewards or benefits from it.
And if you're regretting applying for a new card, know that there are options beyond delaying activation or closing the account.
Here's what to know about not activating a credit card.
You won't dodge the hard inquiry
When applying for a new credit card, the card issuer performs a hard inquiry (or "hard pull") of your credit to determine whether you qualify. Such inquiries may temporarily lower your credit scores.
How much your scores drop depends on many factors, including the frequency of hard pulls on your credit. But skipping the activation step doesn't "undo" or avoid the damage. Your credit has already been pulled, and you've already been approved for the credit line.
Keeping your card inactive won't change that.
The good news is that hard inquiries typically drop off your credit report after two years.
You won't avoid fees
Skipping the activation step won't exempt you from paying any fees associated with a credit card. A credit card account opens from the moment of approval, not activation; activation lets the issuer know that the rightful card owner received the card.
If a card has an annual fee, that charge will be on the billing statement regardless of whether you activate the card. These yearly fees might run as high as nearly $700, but any amount may be too much for a card that isn't being used.
And failing to make on-time payments toward a credit card balance — which includes the annual fee — may trigger late fees and/or a penalty APR that you also won't be able to avoid, even with an inactive card.
You won't be able to use the card
This may sound obvious, but if you don't activate your new credit card, you can't use it. And if you can't use it, you can't cash in on any introductory bonus offers tied to spending.
For example, the Capital One SavorOne Cash Rewards Credit Card features the following welcome offer: Earn a one-time $200 cash bonus after you spend $1,000 on purchases within the first 3 months from account opening. Per the card's terms and conditions, the clock starts ticking on that offer from your "rewards membership enrollment date," so you'd need to activate the card and meet the spending requirement within the designated time frame to snag the bonus.
That's to say nothing of the other valuable perks you might be leaving on the table by keeping your credit card inactive. Depending on which one you've applied for, you may be forfeiting ongoing rewards in popular spending categories, 0% introductory annual percentage rate periods, various forms of insurance, zero-liability fraud protection and more.
Longer-term consequences are possible
If you allow fees to accrue on an inactive credit card account and pay them too late, your credit scores could suffer. But even if your inactive card charges no fees, you may encounter some credit score-related problems.
Credit card issuers can decide to shutter an account that's never been activated, and an account closure can harm your credit scores in more than one way.
For starters, it can affect the length of your credit history, which is a factor in how credit scores are calculated. Lenders like to see older accounts that have been well-maintained over time. If you were approved for a credit card but kept it inactive for so long that the issuer finally closed it, that could dent your credit scores.
Secondly, an account closure could affect your credit utilization ratio, a more significant factor in calculating credit scores. Credit utilization is the percentage of available credit that you're using, and in general, the lower your ratio, the better. But that's harder to achieve if you suddenly lose access to a line of credit. For example:
Imagine you have a $500 balance on your only credit card, which has a $1,000 limit. Your credit utilization ratio is 50%. (A $500 balance divided by a $1,000 limit.)
Then let's say you apply and are approved for a new credit card with a $2,000 limit. If your balance stays the same, your utilization rate drops to 16.7%. ($500 divided by your new total credit limit of $3,000.)
But if the issuer of that new card closes the account because it hasn't been activated, your credit utilization ratio can shoot back up.
Use this tool to see how adding or losing a credit card impacts your credit utilization ratio.
Alternatives to keeping a card inactive
If you have buyer's remorse
Maybe you started having second thoughts once you received your credit card in the mail, and you wish you'd chosen a different product. Don't despair yet; you may have options.
Call the card issuer (the number will be on the back of your credit card) and request a product change to another card that's a better fit for your lifestyle — maybe one with better rewards or a lower annual fee.
You may be required to activate your existing card first, and there's no guarantee that your request will be honored. But it won't hurt to ask.
If you're worried about overspending
If you're hesitant to activate a new credit card out of fear of abusing it or going into debt, canceling the card may be best. Yes, your credit scores could take a hit, but it should eventually recover with the responsible use of any existing credit accounts.
Applying a lock or freeze to a credit card is another way to control spending. Many card issuers allow you to essentially "turn off" your card for a period, which prevents new charges on the card from going through and might help you curb impulse spending.
Also, keep in mind that you don't have to use the card every day for every purchase. Instead, you could activate it, put a single recurring expense on it — such as a streaming subscription — and set up an automatic payment to ensure you pay it off each month. That way, your activated card can still live in the sock drawer while it helps your credit.
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