Inactive credit card risks: closing a card without planning can hurt your credit score—here’s why it matters.

Credit Card: Do you, too, quietly stop using your credit card in an attempt to control your spending? If so, do not make this mistake; you could end up paying a heavy price for it. Want to know how?

Credit Card: A credit card is a financial instrument provided by a bank that allows you to access credit during times of need—specifically when you do not have immediate funds available. You then settle the bill the following month once you have the money. However, this can often become a financial trap for people when the card is used excessively. To avoid this predicament, many people choose to "silently" deactivate their cards—that is, they simply stop using them altogether. But did you know that this is actually the wrong approach?

Is an Inactive Credit Card a 'Silent Killer'?

When you go for an extended period without using your credit card, your credit score can take a hit. Specifically, when you close an old credit card account, your overall available credit limit decreases. Consequently, your credit utilization ratio—the percentage of your available credit that you are currently using—increases. This rise in the utilization ratio can have a negative impact on your credit score.

How Will This Affect Your Financial Situation?

Here, we outline in a few simple steps exactly how this situation can impact your financial standing:

If you do not use your credit card for a prolonged period, your credit score will decline. As a result, you may face difficulties in securing loans or credit facilities in the future.
Closing an old credit card account shortens your credit history; this reduction in the length of your credit history is a primary reason why your credit score may drop.
This can also impact your credit limit; banks reserve the right to reduce your credit limit if they observe that the card is not being utilized actively or responsibly.
Furthermore, you may lose access to benefits such as cashback, reward points, and other perks associated with the card.
Even if you simply stop using the card without formally closing the account, the annual maintenance fees will continue to be charged. In such a scenario, this represents a significant financial loss for you. Make a Well-Considered Decision

If you are planning to cancel a credit card, do so after careful consideration. The proper procedure is to have it closed directly through the bank, rather than simply ceasing to use it yourself or initiating the closure independently. Furthermore, using the card responsibly and prudently is also a sound approach.