Why Not Using Your Credit Card Can Actually Hurt You

In today’s digital world, almost everyone who has a bank account also has a credit card. With offers like cashback, discounts, travel perks, and shopping rewards, it’s easy to end up owning more than one card. But many people simply keep a few of them aside, thinking they’ll use them only in emergencies.

What most don’t realize is that not using a credit card at all - or suddenly deactivating it - can end up affecting your credit health, especially your CIBIL score.

According to banking rules and RBI guidelines, banks usually keep inactive credit cards active for up to 12 months. If there are no transactions during this period, the bank will notify the cardholder before taking steps to deactivate or cancel it. After a notice period (usually around 30 days), the card may be closed. So if you don’t want to keep a card, it’s better to formally request closure through your bank.

Experts also suggest that to keep a credit card active, it’s good to use it at least once a year - even a small transaction like a ₹100 mobile recharge is enough. Just remember, things like EMI payments or auto-debits may not always be counted as active usage.

While an unused card doesn’t directly damage your CIBIL score, problems can arise when it is closed. When a card is cancelled, your total available credit limit goes down. This can increase your credit utilization ratio, which is an important factor in your credit score.

Financial experts usually recommend keeping your credit utilization under control and not maxing out your limits. If your total available credit reduces, your usage percentage can go up - even if your spending stays the same.

If you have a credit card with high annual fees that you rarely use, closing it might make sense. But before doing that, always make sure there are no pending dues or interest charges. It’s also better to formally request cancellation through customer care or a bank branch and get written confirmation. After closure, it’s a good idea to check your credit report after about a month to ensure everything has been updated correctly.