How Long Can You Keep a Credit Card Unused? Here's What RBI Rules Say and When Banks Can Block It

In today's digital world, credit cards are no longer just a payment method—they've become a powerful tool for earning rewards, managing expenses smartly, and even building your credit history. Many users own multiple credit cards dedicated to specific purposes like travel, dining, shopping, or utility bill payments. However, it’s common for some of these cards to go unused for extended periods.

This brings up an important question: How long can a credit card remain unused before the bank blocks or deactivates it? And if it is blocked, what happens to your credit score and how can you reactivate the card? Let’s break down the key points as per RBI guidelines and expert advice.

What Happens If You Don’t Use Your Credit Card for a Year?

As per the Reserve Bank of India’s (RBI) 2022 guidelines, if a credit card remains inactive for over 12 consecutive months, the issuing bank is required to notify the cardholder. If the cardholder doesn’t respond within 30 days, and there are no outstanding dues, the bank has the right to close the credit card account.

Once the card is closed, the bank must also report this change to credit bureaus, which may impact your overall credit profile and history.

How to Keep Your Credit Card Active

To avoid having your credit card blocked due to inactivity, the easiest way is to make at least one transaction each year. Even a small purchase or utility bill payment is enough to keep your card in active status.

If you own a travel-focused card, use it while booking flights or hotels during your vacation. However, it’s important to note that charges like interest or service fees levied by the bank do not count as transactions for activity purposes.

Also, be aware that if you leave a card unused, some banks may still deduct annual maintenance charges, which could lead to unwanted dues.

Does Not Using a Credit Card Hurt or Help Your Credit Score?

Interestingly, keeping a credit card open but unused can actually be beneficial for your credit score. Here's why:

• Your total available credit limit remains high.

• Your credit utilization ratio (CUR) stays low.

• A lower CUR is seen as a positive indicator by credit rating agencies.

Example:

Let’s say you have two credit cards with a limit of ₹10 lakh each, totaling ₹20 lakh. If you only spend ₹6 lakh a month, your CUR is 30%, which is considered healthy.

But if you close one card, your total limit drops to ₹10 lakh. In that case, spending the same ₹6 lakh would push your CUR to 60%, which can negatively affect your credit score.

Things to Consider Before Closing a Credit Card

If you're thinking of closing a credit card, make sure you understand the reason behind it. Here are some valid scenarios:

• You’re unable to manage high outstanding balances.

• The card has high annual or renewal charges.

• You no longer use the card frequently.

However, avoid closing cards that you’ve consistently used and paid on time. These cards contribute to a strong credit history and help maintain a good credit score. An old, well-managed credit card reflects responsible financial behavior and increases your chances of loan approvals in the future.

Final Thoughts

A credit card can be a valuable asset when used wisely. But if left unused for over a year, banks may deactivate it based on RBI norms. The good news is that even a single yearly transaction is enough to keep it active. Furthermore, unused cards can help boost your credit score by improving your credit utilization ratio.

Before deciding to close any credit card, weigh the pros and cons carefully. Maintaining a diverse and responsibly used credit profile is crucial for long-term financial health and creditworthiness.