How Often Should I Use My Credit Card?

Brendan Harkness

Brendan Harkness | Blog

May 30, 2018 | Updated Nov 28, 2018

Wondering how often you should use your credit cards? The quick answer is: at least once every six months, but it also depends on the particular card issuer.

Why You Need to Use Your Credit Cards

There are two primary reasons why you should consider how often you use your credit cards:

  1. So your cards won’t be closed for inactivity
  2. To make sure that you’re getting enough value from the cards, if they have annual fees

Reason number 1 will apply to every credit card (or charge card). Reason number 2 will only apply to cards with annual fees.

First we’ll go over everything you need to know about preventing your cards from being closed for inactivity (also known as dormancy). Then we’ll discuss how to offset a card’s annual fee, and to make sure you’re getting your money’s worth.

Most personal finance advice regarding how often to use your cards focuses on inactivity. But if any of your cards have annual fees, it will be just as important to make sure you’re getting enough value from them to offset the cost.

FAQ on Credit Card Inactivity

How often should I use my credit cards to keep them active?

There is no specific minimum requirement to keep your cards active. We usually recommend using your cards once every six months. If you want to play it safe use them once every three months.

Every card issuer is different. Some may close a card with a few months of inactivity (this seems rare), while others might take years. There is no industry standard for how long a card can remain open but inactive. Card issuers may treat different cardholders differently depending on which card they have, their account history, and their credit profile, as well.

We’ve seen frequent reports from people that their Walmart® Credit Card (Review) was closed, which may be related to inactivity. If you have store credit cards you may want to use them every three months or so to keep them active.

You don’t have to spend a lot of money to keep your cards open, you can just each card for one small purchase. Treat a friend to lunch, top off your gas tank, or just buy a candy bar. Any purchase will count.

Check out our video by credit expert John Ulzheimer for more on this question, and some additional insights into why credit card companies do what they do. Although John mentions using cards every few months to keep them active, we currently recommend every six months in most cases.

There isn’t very much good data on when issuers cancel cards for inactivity. People have attempted to catalog their experiences, but it’s not really feasible because card issuers could change their policies at any time, and they may treat different cards differently. So you can’t be sure if your situation will match what you read from others.

How can I remember to use my older credit cards?

You might throw old credit cards in a drawer and forget about them. Then, if any of them are closed your credit score will take a hit, seemingly out of nowhere. And if you go to use that card you’ll find, to your surprise, that the card is canceled and you’re declined.

If one of your credit cards is no longer in regular use, you shouldn’t just put it away and stop thinking about it. You’ll need to use it occasionally to prevent it from being closed for inactivity. There are many strategies to remind yourself to use old credit cards, but you can break them down into two basic categories:

  • Digital calendar/schedule reminders: You can set reminders for yourself to use cards at certain dates throughout the year with tools like Google Calendar
  • Physical calendar/schedule reminders: If you have a wall calendar or schedule book you can make notes on different months, indicating when to use which card

You can think of the year as broken up into four quarters of three months each, or four seasons. If you have many credit cards to keep active, you can set up your reminders to use them each once every two quarters.

Here are a few other strategies you can consider:

  • Set up a system you won’t have to think about: You can use cards to pay for the recurring charges of subscription services, like Netflix or Hulu. But don’t forget about these charges. Setting up autopay on your accounts will ensure that they’re always paid off and never late.
  • Add all your credit cards to your Amazon account: If you shop on Amazon you can use credit cards to reload your Amazon balance periodically, with a minimum deposit of just 50 cents. This is just pre-paying for purchases, assuming you were going to buy those items through Amazon anyway, so it doesn’t cost you anything extra. Some card issuers will actually cancel very small balances, like those under $1.
  • Use a credit card organizer: If you have a credit card organizer, like a folder or booklet, you can order all of your cards. Then, once every six months, you can simply go down the line and use each card once to keep them active.

Do credit card issuers need to notify me before closing my cards for inactivity?

No, in most cases credit card issuers do not need to send you a notice before closing your card for inactivity. Typically, you’ll be informed that your account is closed after it actually happens.

Federal law requires credit card companies to send you a notice if they cancel your card for certain reasons, and also for account changes. But not when they close your card for inactivity, or if you break the terms of the agreement in some way, such as by paying late or missing payments.

In some states, however, like California, credit card issuers are required to send a notice 30 days before closing your account for inactivity. Federal law doesn’t require a notice, but your particular state legislation might. So the laws governing credit card companies might be slightly different depending on where you live.

Credit card issuers don’t need to inform you before closing your account for inactivity, but in some cases they might do so anyway, to encourage you to keep the account open. They may send you a notice saying they’ll close the card in a month, or a few months, unless you use it for a purchase. We here at Credit Card Insider have received a couple notices like these from card issuers (Bank of America and Chase, in particular).

Will a card closed for inactivity have a negative impact on my credit?

The overall effect of having a card closed on your credit scores will usually be negative. Exactly how negative it will be depends on your particular credit profile.

It’s important to know that a closed credit card account will stay on your credit report for 10 years, as long as it was closed in positive standing. That means you can continue to benefit from the card account in some ways.

If your account is closed while in a delinquent status, that account will be removed from credit reports after 7 years. Cards that are cancelled simply for being inactive will be reported as ending in a positive status, they won’t be counted as delinquent.

A closed card will effect your credit in several ways:

  • Credit utilization goes up: Losing that card’s credit limit will cause your overall credit utilization to go up, because you have less available credit.
  • Average age of accounts goes down: Without that credit card your average account age might drop, depending on the ages of your other accounts.
  • Number of accounts goes down: You’ll have one less account on your credit report, which won’t have a significant impact unless you have very few other accounts.
  • Variety of credit may decrease: If you don’t have many other credit cards the variety of your accounts will decrease, which will have a minor negative impact.

The most important effect of losing a card will be on your overall credit utilization. The other effects will take 10 years to occur if the card is closed for inactivity, but they still might be significant, depending on your particular credit profile. You’ll have 10 years to deal with those issues by improving your credit, in any case.

Credit utilization is one of the largest factors in the calculation of your credit scores. Lower utilization is better, in general, and we typically recommend staying below 10% total utilization to keep your credit scores in top shape. A total utilization over 30% is getting into the danger zone, and will start negatively impacting your credit scores.

So, depending on the balances and credit lines of your other cards, losing one card could have a major impact on your overall utilization.

For example, imagine you have three credit cards:

  • Card A has a balance of $2,000, with a credit limit of $6,000
  • Card B has a balance of $2,000, with a credit limit of $6,000
  • Card C has a balance of $0, with a credit limit of $8,000

In this example your total credit limit is $20,000, and your total credit card balance is $4,000. This means your overall credit utilization is 20% (because $4,000 is 20% of $20,000). This will be pretty good for your credit, although it would be better if it was lower.

What happens if Card C is suddenly closed for inactivity? That card’s credit limit will no longer be counted in the calculation. Now you’d have a total credit limit of $12,000, with the same total balance of $4,000.

Your overall credit utilization jumps up to 33.33%, which will almost certainly cause your credit scores to drop. You can quickly fix this by paying down the balances on Cards A and B. But if this isn’t feasible in your current financial situation, you’ll be stuck with a higher utilization and lower credit scores.

What other negative effects can come from having a card closed for inactivity?

There are a few other possible effects of having a card suddenly closed, which may or may not apply to you.

  • Potential embarrassment: It might be an uncomfortable experience to have your card declined, like if you’re out on a date.
  • Loss of rewards: When a card is closed you’ll lose any rewards you’ve earned that were associated with that account, like points, miles, or cash back.
  • Loss of card benefits: If you were planning to use a card benefit for an upcoming purchase or experience, like airport lounge access when booking a flight, you’ll be out of luck.

You might not be bothered by these problems, depending on your particular card and situation. But if you had hundreds of dollars worth of points saved up, or were planning to enjoy a luxurious vacation with the help of your travel perks, this could be a huge disappointment.

Why do card issuers close cards for inactivity?

Credit card issuers close cards for inactivity because they aren’t making any money on the account. If they aren’t making any money from you, and don’t expect to any time soon, there’s no reason for them to keep your account open.

Card issuers make money in these three basic ways, among others:

  • Swipe fees: Also known as processing fees, these are a small percentage of each transaction made with credit cards (paid by the merchant, not the cardholder)
  • Interest payments: Charged when you carry a balance on your account with an interest rate above 0%
  • Annual fees: A yearly sum that the card issuer can always count on getting, whether you use the card or not

So, if you’re not using one of your cards you won’t be generating swipe fees or paying interest. And if that card doesn’t have an annual fee either, there’s no way for the card issuer to make money on that account.

Closing your account then becomes in the card issuer’s best interest, because it costs them money to keep it open. And they would rather extend that credit to someone who will actually use it, as well.

Credit card companies used to be able to charge inactivity fees after some period of dormancy, but this was made illegal as part of the CARD Act of 2009. Overall, this probably created a better situation for the average cardholder, letting you keep credit cards open indefinitely for no extra cost. But it also created an incentive for card issuers to close accounts for inactivity, so it’s a bit of a double-edged sword.

Offsetting Credit Card Annual Fees

If you’re paying an annual fee for a credit card, you should make sure that you’re getting your money’s worth. The card should provide more value than the yearly fee, otherwise it’s just draining your bank account.

There are three basic ways to get value from a credit card for this purpose:

  1. Rewards: Spending rewards for making purchases, and introductory bonus offers
  2. Benefits: Travel perks, shopping discounts, access to presale and preferred tickets, etc.
  3. Credit Building/Rebuilding: If you have poor credit you may not be approved for credit cards without annual fees, so you might need to pay to use a card

The first two ways are for people who want to profit with rewards credit cards. The third way is for people who don’t have any other options, who have to settle for a card with an annual fee out of necessity. We’ll go over all three of these ways below.

If you’re not getting enough value from a card to justify the fee, we recommend closing that card. This is one of the few occasions that we advise closing a card, because this will usually have a negative impact on your credit, as described above.

Credit cards with annual fees tend to come with better rewards and benefits, or else they’re designed for people with less-than-great credit. But there are also many great cards without fees, some of which might be right for you. Check out our picks for the Best No Annual Fee Credit Cards to browse the top card offers.

Rewards

You can use the rewards you earn from spending and through introductory bonuses to offset annual fees.

If a card has a $100 annual fee and you earn $100 worth of rewards, the card becomes effectively free to use in that year (as long as you avoid interest and other fees). Any rewards you earn after that will be profit.

Take the Blue Cash Preferred® Card from American Express (Review), for example. It has a $95 annual fee, and comes with the following reward program:

Spending Rewards
  • 6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1% cash back)
  • 3% cash back at:
    • U.S. gas stations
    • select U.S. department stores
  • 1% cash back for all other purchases
Introductory Bonus Offer
  • $200 cash bonus for spending $1,000 in the first 3 months after account opening
    • equivalent to 20% cash back

Let’s just use grocery spending for this example. If you spend $1,584 on groceries you’ll earn $95 in cash back, enough to completely offset the annual fee. Any rewards earned after that point will be profit.

This is all it takes to offset the annual fee using spending rewards. It’s a pretty simple concept.

You can also see the introductory offer as a way to offset the card’s fee. By spending $1,000 in the first 3 months you’ll get a $200 bonus, enough to offset the fee for over two years.

Many reward cards have both spending rewards and an introductory bonus, providing a clear and obvious way to offset the annual fee.

Benefits

Some cards with annual fees, particularly travel credit cards, have benefits and features that can provide quite a lot of value.

The Chase Sapphire Reserve (Review) is a popular high-end travel card, with a hefty fee of $450 per year. You might be aghast that anyone would pay that much for a credit card, but the perks that come with this card make it very reasonable for some travelers.

We’ll just look at a few benefits of the Sapphire Reserve:

  • $300 Annual Travel Credit: A $300 credit will be automatically applied to eligible travel expenses each year, like airline flights, hotel bookings, and car rentals
  • Complimentary Priority Pass Select Membership: Access over 1,000 airport lounges around the world for free (guests cost $27 each)
  • Global Entry or TSA Pre✓ Application Fee Credit: A credit for the application fee for either Global Entry ($100) or TSA Pre✓ ($75), available once every four years
  • Chase Luxury Hotel & Resort Collection: Complimentary services at participating properties, like daily breakfast for two, free WiFi, unique gifts, room upgrades, and early check-in and late check-out

It’s easy to see how these benefits can provide plenty of value each year. The $300 travel credit alone offsets the annual fee down to $150, so it starts looking much more manageable.

The Priority Pass Select access, which provides unlimited visits to Priority Pass airport lounges, normally costs $399 per year at their Prestige-level membership. You might not value this perk that highly if you don’t visit these lounges that often, but this is what Priority Pass would usually charge for this level of access.

At this point you’ve accumulated $699 in value. That offsets the annual fee down to zero, and actually provides $249 in positive value. But we’re not done yet.

The Global Entry application fee credit is $100 every four years, which is equal to $25 per year. That brings our total value per year up to $724, or $274 above the annual fee.

The value you’ll get from the Luxury Hotel & Resort Collection is more intangible, and it will depend on how you use it. A free breakfast for two every morning could save you a lot of money if you stay at hotels often. If you need WiFi in your room this perk could save you $10–$20 per day, depending on where you’re staying. And the room upgrades, along with flexible check-in and check-out times, could be worth more or less depending on your particular lifestyle.

So, with these four benefits alone you can get over $724 in value. That’s quite a bit more than the $450 annual fee, and this doesn’t even cover all of the perks that come with the Sapphire Reserve. And we haven’t factored in any of the spending rewards or introductory bonuses you can earn either, which make this card even more valuable.

Examples like this show how you can use a card’s benefits to offset the annual fee, and even gain more value on top of that. But this assumes you’ll be able to make good use of these benefits. If you can’t use the full $300 credit and never visit airport lounges, you won’t be getting nearly as much out of the Sapphire Reserve card as you could.

This basic principle is true for every card with interesting and useful benefits: if you don’t actually use the benefits, they won’t do you any good.

Credit Building/Rebuilding

If your credit is poor or very bad, or if you have limited or no credit, your credit card options will be more restricted. You may need to settle for a card with an annual fee for the purpose of improving your credit, rather than earning rewards and enjoying nice benefits.

Unsecured Cards

The Capital One® QuicksilverOne® Cash Rewards Credit Card (Review) has a $39 annual fee and is meant for people with average credit, providing a way to establish a positive credit history.

You’ll get 1.5% cash back for every purchase with this card. It comes with some basic shopping and travel protections, along with access to a higher credit line after making your first five monthly payments on time.

You’re paying this $39 fee for the privilege of building up your credit while earning rewards. It seems like a pretty small price to pay, if you can’t get approved for a card without an annual fee.

You don’t necessarily have to get a card with a fee if your credit isn’t great. There are many no annual fee credit cards available, and you might qualify for some of them. Take a look at our picks for the Best Credit Cards for Bad Credit. And before applying, you can check to see if you’re pre-qualified for any no-fee credit cards.

Secured Cards

Secured credit cards are also designed for building or rebuilding credit. They require a refundable security deposit when you’re approved, which will fund the credit limit of the card. In most cases your credit limit will be equal to the deposit you make.

Many secured cards have no annual fee, like our top card pick, the Discover it® Secured (Review). But there are also some secured cards that will charge a fee in addition to the security deposit you have to make. You might want one of these cards for the particular features or benefits it has, despite the fee.

The Wells Fargo Secured Visa Card, for example, has a $25 annual fee. This might be a good option for some people because it has a maximum security deposit/credit limit of $10,000, which is much higher than most other secured cards. But you’ll need to put down a matching security deposit to get a credit limit that high. If you have poor credit but you still want a very high credit limit, and can afford to put down that much, the Wells Fargo Secured Visa will be one of your few options.

The BankAmericard Secured Credit Card also has an annual fee, this time of $39. This card has a maximum security deposit/credit limit of $4,900. You might want this card because it offers the chance to have your security deposit returned after showing responsible credit behavior. Other secured cards have similar offers for no annual fee, like the Discover it Secured. But you may have to choose the BankAmericard Secured card if you want that feature but can’t qualify for the Discover card.

The ability to establish a positive payment history and build up your credit is an intangible benefit. You can’t really put a particular price on it. If you don’t have very good credit scores, you’ll have to decide if the fee is worth it to you.

There are other ways to improve your credit besides credit cards. Consider credit builder loans as another option.

Wrapping Up

There is no perfect answer to how often you should use your credit cards.

When it comes to keeping your cards active, we recommend using them once every six months. This should prevent card issuers from cancelling them for inactivity in most cases.

If you’re worried and want to play it safe, use your cards every three months instead. And if you have any store cards, consider using them once every three months as well.

Figure out a system to keep track of your credit cards, one that works for you. Staying organized can help prevent any nasty surprises in the future, when you attempt to use a card only to find it was cancelled a year ago.

For cards with annual fees, you should be sure that you’re getting a good value from them relative to the cost. You can do this through the rewards you earn from making purchases, or through introductory bonuses. For some cards, the benefits you get can go a long way towards offsetting the fee, and can even provide a positive value beyond that.

Or, you may need to apply for cards with annual fees because your credit isn’t good enough for no-fee cards. If that’s your situation, be sure to look into your options and choose your card carefully.

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