As a credit card user, you might be wondering how often you should use your credit card to keep it active. After all, a dormant credit card account could negatively affect your credit score and limit your ability to use the card in the future.
In this article, we will explore the ideal frequency of credit card usage to maintain an active account and boost your credit score.
Understanding the Importance of Credit Card Activity
Credit card activity is a crucial component of your credit score. Your credit score is a numeric representation of your creditworthiness, and it plays a significant role in your financial life.
A good credit score could help you secure loans, get lower interest rates, and even land a job. On the other hand, a poor credit score could limit your options and cost you money in the long run.
One of the factors that impact your credit score is your credit utilization ratio, which is the amount of credit you use compared to your available credit. If you have a high credit utilization ratio, it could negatively affect your credit score. That’s where credit card activity comes into play.
Regular credit card usage and timely payments could help you maintain a low credit utilization ratio, improve your credit score, and keep your credit card account active.
How Often Should You Use Your Credit Card?
The frequency of credit card usage to maintain an active account could vary depending on the card issuer’s policies. Some credit card issuers might close your account if you don’t use it for a certain period, while others might keep it open as long as you make timely payments.
Typically, credit card issuers might consider a credit card account dormant if it’s not used for six months or longer.
To keep your credit card account active and avoid potential account closure, it’s advisable to use your credit card at least once every three to six months.
However, this doesn’t mean you should make unnecessary purchases just to keep your credit card account active. Instead, you could use your credit card for everyday expenses such as groceries, gas, or utility bills and pay the balance in full before the due date.
Benefits of Regular Credit Card Usage
Aside from keeping your credit card account active, regular credit card usage could offer other benefits. Here are some of the advantages of using your credit card frequently:
- Rewards: Many credit cards offer rewards such as cashback, points, or miles for every purchase you make. By using your credit card frequently, you could earn more rewards and maximize your benefits.
- Credit Limit Increases: If you use your credit card responsibly and make timely payments, your credit card issuer might reward you with a credit limit increase. A higher credit limit could boost your credit score by improving your credit utilization ratio.
- Fraud Protection: Credit cards offer better fraud protection compared to debit cards. If your credit card is used fraudulently, you’re typically not liable for any unauthorized charges as long as you report them promptly.
Tips for Responsible Credit Card Usage
While regular credit card usage could boost your credit score and keep your account active, it’s crucial to use your credit card responsibly. Here are some tips for responsible credit card usage:
- Keep track of your spending: Make a budget and track your expenses to avoid overspending and racking up debt.
- Pay your balance in full: Avoid carrying a balance and paying high-interest rates. Pay your balance in full before the due date to avoid interest charges.
- Set up alerts: Set up alerts for due dates, balances, and fraudulent activity to stay on top of your credit card activity.
Key Takeaways
- Regular credit card usage could help maintain an active account and boost your credit score.
- It’s advisable to use your credit card at least once every three to six months to keep it active.
- Using your credit card for everyday expenses and paying the balance in full before the due date is a responsible way to keep your account active.
- Regular credit card usage could also offer benefits such as rewards, credit limit increases, and fraud protection.
- To use your credit card responsibly, keep track of your spending, pay your balance in full, and set up alerts for due dates and balances.
Credit card activity is an essential component of your credit score, and it’s crucial to use your credit card responsibly and regularly to maintain an active account and improve your credit score.
By using your credit card for everyday expenses and paying the balance in full before the due date, you could enjoy the benefits of credit card usage while avoiding the risks of debt and high-interest rates.
