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Part of any sound 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.
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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. Card accounts closed for inactivity can negatively impact your credit score, which makes it difficult to get approved for future cards or lines of credit. This could mean missing out on a great welcome offer you're otherwise qualified for.
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 in any capacity. The interchange income and interest that banks would earn from an active account drop to zero.
Plus, inactive accounts inherently carry 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 unless you've set up transaction alerts.
How long before a bank cancels an inactive card?
If a card is inactive long enough, the issuing bank can cancel it without notice. And this is due in large part to a court's interpretation of the Credit CARD Act of 2009.
In most cases, the real risk begins after about a year or more of inactivity. Rest assured, a bank won’t (or shouldn’t) close your account if you go a month or even a couple of quarters without using it.
Account cancellations 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. These are all factors that contribute to a healthy credit score.
In addition, inactive co-branded cards can also cause problems with loyalty program themselves. In 2023, Air Canada updated its terms to make it easier to shut down Aeroplan accounts of disengaged members. Put differently, it's possible you could lose your Aeroplan account entirely by sock-drawering the Aeroplan Card(Rates & Fees).
We don’t know exactly how long you can go without activity before that happens, only that the door is open. And there’s no reason to assume Air Canada is the only one taking this stance either. Others could follow suit if they haven’t already.
But the solution to all of this is simple. Keep your credit cards active and paid on time. Do that, and you’ll stay in the everyone’s good graces.
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 to generate some spending 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 spend a few dollars.
Additionally, utility payments and monthly bills for phone and internet are great ways to ensure a card sees the light of day. 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.
Similarly, you can break up a single charge into multiple payments if the merchant allows it. For example, my home energy provider lets me make small credit card payments toward my overall bill. This is an easy way to keep accounts active and meet minimum monthly transaction requirements on cards that only award points if you hit a certain number of swipes.
Set personal reminders to use cards throughout the year
Setting reminders to use 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.
For rates and fees of the cards mentioned in this post, please visit the following links: Aeroplan® Credit Card (Rates & Fees)
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