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Part of any credit card strategy is learning how to manage the cards that you have. And depending on the kind of person you are, that may be just a couple cards or a couple dozen.
But no matter how many cards you carry in your wallet, it's essential to keep your accounts active to remain on good terms with the banks that issue them. Here are three easy ways to keep your credit card accounts active.
Why It's Important To Keep Your Credit Card Accounts Active
There's more to card management than earning a welcome bonus and sending a card straight to the sock drawer (where it might rightfully belong).
Credit card accounts closed for inactivity can negatively impact your credit score and make future credit harder to access.
Idle accounts do no good to the banks that issue the cards. There's little benefit to extending credit to an account that isn't using it. The interchange income and interest — that banks would earn from an active account — drop to zero. Plus, inactive accounts present more risk. How long might it take you to notice fraud on a card you aren't using? You probably aren't checking recent charges on it very often.
If a card is inactive long enough, the issuing bank can cancel it without notice — courtesy of a court's interpretation of the Credit Card Act of 2009.
Typically, the rubber meets the road after about a year or more of inactivity. Rest assured, a bank won't (or shouldn't) delete your credit card account if you go a month without using a card.
Account cancelations can hurt your credit simply by lowering your available credit — which could spike your utilization rate — decreasing the average age of your accounts, or limiting your credit mix — factors that contribute to a healthy credit score.
Additionally, inactive co-branded credit card accounts can draw the ire of the companies with which the card partners.
For example, we recently learned about interesting developments with the Air Canada Aeroplan program. Air Canada adjusted its terms and conditions to include language that makes it easy to shut down the Aeroplan accounts of “disengaged” loyalty members.
Effectively, earning a sign-up bonus and shoving a co-branded credit card in a drawer to be forgotten is a major no-no. And there's no reason to think Air Canada is unique in this endeavor. It very well could be the norm for other issuers in the near future.
But here's the rub: Keep your credit card accounts active and paid on time; if you do that, you'll stay in the issuer's good graces. It's that simple.
3 Easy Ways To Keep Your Cards Active
Keeping your credit card accounts active doesn't have to be a tall task. Here are three easy ways to do so.
Keep your cards with you to use for small purchases
Taking the sock drawer out of the equation can help ensure each card you have is used once in a while.
Carrying more cards with you and swiping them for small purchases, such as a pack of gum or a few gallons of gas, can keep your accounts in great shape and out of trouble.
Adding a card to a digital wallet (Apple, Samsung, and the like) is another way to accomplish this and keep cards front of mind. Alternatively, reload your Amazon balance with at least $5 (a newly implemented minimum) to generate activity.
Use different cards for recurring charges or automatic bill payments
Automated purchases or recurring charges are another easy way to simplify the process of keeping your accounts active.
Using different cards to cover the monthly subscription costs of services like Netflix or Amazon Prime is an effortless way to swipe a card.
Additionally, utility payments and monthly bills for phone and internet are great ways to ensure a card sees the light of day — even if it doesn't leave your sock drawer. However, you'll want to keep track of which cards you use for which bills or services to prevent a statement from going unpaid if you happen to close one of those cards during the year.
Set personal reminders to use cards throughout the year
Setting reminders to swipe cards throughout the year is a great way to ensure you remember to use a card.
Reminder apps, digital and paper calendars, and even a sticky note here and there can be handy tools, and setting them up is pretty simple. This way, you won't have to wonder which cards you've swiped this year and which ones you haven't.
Final Thoughts
Keeping your credit card accounts active is essential to maintaining positive relationships with the banks that issue the cards in your wallet. From swiping a card a couple of times a year to using different cards for recurring purchases, simple actions can keep your accounts in great shape, and you don't have to go out of your way to do it.
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