Managing Rarely Used Credit Cards in 2010
Lots of Americans changed their credit card habits within the past two or three years because they realized how problematic it could be to carry too much debt or rely on plastic instead of budgeting cash. As a result there are many cardholders who have open lines of credit or credit card limits that they never use. These dormant accounts do not make any money for credit card issuers, however, so lots of banks and other card company institutions have started to tack on fees if you haven’t used your card in a while. These inactivity fees can get expensive, and they really serve no purpose for you as a consumer. With annual dormancy or inactivity fees hitting prices of as much as $90, it pays to be vigilant.
Most card issuers will not add an annual charge as long as you take out your card three or four times a year – about once each quarter – and use it to make a purchase. You can even pay off the balance right away instead of rolling it over into the next payment cycle so that you do not have to pay additional interest. Your card company will still make a small amount of money from that kind of infrequent use because the merchants you deal with have to pay a sum to the card company even if you do not pay any credit card interest.
It’s a good idea to take an inventory of all of your credit cards this year, even the ones you hardly ever or never use. You can cancel the dormant ones, of course, but that could lower your credit score because having open lines of credit you do not use looks good in terms of your FICO score. Most experts recommend that instead of closing the accounts completely that you just use them a few times as year as described above. That way you get to keep them – and keep your credit score stronger – free of charge. Of course if they are cards that charge an annual fee anyway you may want to close them if they aren’t used and either have fewer cards in your wallet or shift to a card that does not charge any annual fee.
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