Thank you for your question. Unfortunately, yes, credit card accounts can be closed by the issuer if they are unused for long periods of time. There is no exact science as to when the issuer of the card will cancel your account, but it is safe to say that it can be canceled after several years of inactivity.
Why canceled credit cards?
The institution which is lending you credit is only so much money to give. Inactive accounts cost them money to maintain because they do not make money off of you with interest charges or transaction fees with merchants. Because of this, it is much more profitable for the card issuer to close your credit line and give it to someone who will use it.
To make matters worse, the issuer does not have to give you 45 days notice as it does with other major changes to your account. Unless you check your credit report often, you will probably find your card does not work when you try to use it.
How a canceled credit card affect your credit score?
The appearance of your credit score which will take the biggest hit from a closed account is the credit utilization rate, which represents 30% of your FICO goal. Your credit utilization compares the total credit used (money you owe) Total credit available to provide a percentage that lenders use to determine the degree of risk that someone may be to lend money . Anything less than 30% is considered a number healthy.
Say you have two credit cards, each with $ 5000 credit on them. Maybe you have $ 2,000 on a card and $ 0 on the other because you have not used for years. Your credit utilization is 25%, as you only have $ 2,000 in debt and have a total of $ 8,000 of available credit. However, if the account balance without closes due to inactivity, your credit utilization would take up to 66%, which could have a potentially negative impact on your credit score.
Closing an inactive card may also have a negative impact on your score, because the old accounts play a moderate role on your score. According to FICO, 15% of your score is based on the age of your accounts, and those being canceled for inactivity are usually the oldest.
To top it all, you can lose rewards points you earned your farm if account because most rewards are only valid if the account is open and active.
How can you avoid?
Using your credit card just once a month can delay closing, even if it is for a small purchase. Most credit card accounts remain active for years without use, but to purchase from time to time is a good idea. Because there is no hard and fast rules with the cancellation of inactivity, it is best to only apply for credit that you need and know that you will use on a regular basis so that it has a positive impact on your score.