You probably know the importance of using your credit card within responsible limits and paying the bill on time every month. But an important factor you may be overlooking is how often you use your credit card.

In fact, if you don't use your credit card often enough, your account could be closed. Though ideal credit card usage varies by issuer, it's recommended that you use your card at least once every three to six months. Here's why.



Why Credit Card Usage Matters

It might seem strange that how often you use your credit card matters, but there are some general guidelines you should follow when it comes to credit card usage. Namely, you should make sure to use it often enough that it remains active.

Using your credit card keeps your issuer from closing the account for inactivity, says J.R. Duren, a personal finance reporter for consumer product research website HighYa.com. "If you stop using your card, it's inevitable that after a certain amount of time, your credit card issuer is going to close your account."

Usually, this can end up harming your credit. But even if your card company hasn't closed the account, some might stop reporting your account to the credit bureaus after several months of inactivity.

Daniel Gillaspia, an attorney and creator of UponArriving.com, a blog that covers developments in travel credit card rewards, says, "There really is no universal standard for shutting down inactive accounts. Some banks may be more proactive and shut it down after six to 12 months of no activity, while others may allow an inactive account to stay open for a couple of years." It's common for store-branded cards, for instance, to allow longer periods of inactivity since you might not shop at a particular retailer as often as you'd use a general purpose card.

Maintaining some activity on your credit card can not only keep your account open, but you also remain a good customer. If you apply for other cards from that same issuer, it will see that you're an active user and perhaps view you as a more profitable customer, says Gillaspia.

In general, you should plan to use your card every six months. However, if you want to be extra safe, aim for every three. Some card issuers will explicitly state in the card agreement what length of time is considered to be inactive.

However, keep in mind that if you're carrying a balance on the account, you could keep it active simply by continuing to make payments. You don't necessarily need to make new charges to be considered active unless you've paid the balance in full.

What Happens When Your Credit Card Becomes Inactive

Why do credit card companies care how often you use your card? It comes down to how card issuers make money.

One way card companies make money is by charging merchants a small percentage of each transaction you make through them. In addition to these processing fees, card companies charge interest on your card balance if you don't pay it in full. If you don't use your card or carry a balance, there's no way for the credit card company to collect either of these fees. Meanwhile, you're costing it money to maintain your account.

Credit card companies have only a limited amount of credit they can extend among all of their customers. In the past, card issuers could charge inactivity fees to make up the cost of servicing idle accounts. However, the Credit CARD Act of 2009 put an end to that practice. It's in the issuer's best interest to close down inactive accounts and extend credit to consumers who are more likely to use it.

Though credit card issuers are required to provide notice when making major changes to your account, such as raising the interest rate, that's not the case when it comes to closing inactive accounts. Usually, they can close your account without warning and will only provide notice after the fact. In many cases, however, your card issuer will contact you with a warning and give you a chance to use your card, since it would prefer to keep an existing account in good standing than close the account and find a new customer.

There are some exceptions. In California, for instance, credit card issuers are required to provide 30 days' notice before closing an inactive account. The laws surrounding this practice vary by state, so you might want to investigate the rules where you live.



How a Closed Account Affects Your Credit

Aside from the inconvenience of having your account unexpectedly shut down, there could be negative repercussions for your credit. How impactful an account closure is depends on your credit profile.

One of the biggest consequences of having your credit card account closed is its effect on your credit utilization – the amount of credit you're using compared with the total credit available to you – which makes up 30 percent of your credit score.

For example, say you had one credit card with a $1,000 limit and a $500 balance and a second credit card with no balance and a $2,000 limit. In this case, your credit utilization would be nearly 17 percent ($500/$3,000). But if your $2,000-limit card were closed due to inactivity, that would bring your utilization up to 50 percent ($500/$1,000). Generally, experts recommend keeping your utilization under 30 percent; otherwise, it could negatively impact your credit score.

Another way your credit could be affected is by decreasing your total number of accounts. This would likely only be a problem if you had a small number of credit accounts or short credit history.

Finally, your variety of credit could also be impacted. Again, if you had few accounts and not many other credit cards, this situation would be more harmful to your credit than if you had a long credit history and many types of accounts to your name.

Can You Use Your Credit Card too Much?

On the other end of the spectrum, you should watch out for overusing your credit card. However, it's not necessarily the frequency that can be a problem, but rather how much you charge.

"The main mistake you can make with overuse is by using the card to make purchases you can't afford or running up your balance quickly and not paying it off," Duren says.

For instance, if you charge more purchases than you can afford to pay off at the end of the month, you'll end up carrying a balance. This means interest will accrue, causing your balance to grow further. A high balance can cause your credit utilization to become too high.

However, even if you have the money to pay off your balance by the due date, running up many transactions during the billing cycle can also present a problem. That's because your balance is usually reported to the credit bureaus when your statement closes, not after your payment due date.

"If you don't pay off your high balance when the credit card issuer reports your balance to the credit bureaus, it will seem like you're maxing out your card when, in fact, you could pay it off immediately," says Duren. "What your credit card issuer reports ends up not being an accurate reflection of your financial situation, and your credit scores will drop."

If you do end up using your card a lot during the month, it can be helpful to pay off some of the balance midcycle so that it never gets too high. Consider asking your credit card issuer for a credit line increase if you often charge more than 30 percent of your limit and pay it off each month.

How to Keep Your Credit Cards Active

Rotate card usage. If you have one main credit card that you use for everyday purchases and other cards that tend to sit in your wallet unused, it might be helpful to put them on a rotation schedule. For example, swap your primary card with a lesser-used card every three months. The downside to this option is if one card offers better rewards than others, you might lose out on some earnings.

Create a calendar reminder. Another option is to set a calendar reminder to use your cards every few months. For instance, you could set a reminder every 90 days to perform a small transaction on each of your cards, then set another reminder for a few weeks later to pay off the balances before the due date arrives.