What Happens If You Don't Use a Credit Card?

Many people hold a card they took for a welcome offer and then forgot. Nothing dramatic happens at first, which is why it feels harmless. Over time, though, an unused card can cost you money or disappear without you noticing. Here is what really happens.

The first thing: fees

If the card has an annual fee, you owe it whether or not you use the card. Some cards waive the fee if you hit a yearly spend, and if you never use the card, you never hit it. A forgotten ₹500 plus GST fee can sit unpaid on a statement you do not open and then attract late charges. See annual fee waivers and how to check statements.

What the bank can do

• Reduce your credit limit. Issuers often cut limits on cards that are not used, because the unused limit is risk they carry for no income.
• Stop sending offers, including upgrades and limit increases.
• Close the card after giving notice.

On closure, the RBI rules are clear on one point: if a card has not been used for more than a year, the issuer must start the closure process only after informing you, and can close the account if you do not respond within 30 days, once all dues are cleared. You should receive that message by SMS or email, so keep your contact details updated.

What happens to your credit score

An open card adds to your total available credit, which helps keep your utilisation low. When a bank closes it, you can lose that effect. The consequences:

• Utilisation can rise, since the same spending now sits against a smaller total limit. See utilisation explained.
• Your average account age may fall over time if the closed card was one of your oldest.
• The closed account usually stays on your report for years, with its history, so the benefit does not vanish at once.

Leaving a card unused does not harm the score on its own. The risk is a surprise closure combined with a new, higher utilisation.

Keep it alive cheaply

If the card has no annual fee, the easiest path is a small recurring payment:

1. Put one subscription or a small utility bill on the card, such as OTT or mobile recharge.
2. Turn on autopay for the full statement amount, so you never miss a due date. See autopay and e-mandates.
3. Check the statement every few months.

This keeps the account active without much effort.

When to close it instead

Close the card if:

• It has a fee you cannot justify and the waiver is out of reach.
• It tempts you to overspend.
• It is a new card with no benefits you will use.

Before you close, consider a downgrade to a free version at the same bank, which keeps your history. Downgrade vs cancel compares both. If you decide to close, follow how to close a credit card safely and check the closure process.

Rewards you may be forgetting

An unused card may still hold points or cashback. Many programmes have expiry dates, and closing the card forfeits them. Redeem first. See reward points expiry.

The bottom line

An unused card is not a free option. It can cost an annual fee, lose its limit or get closed. If it is free, keep it alive with a small autopay; if it costs money, downgrade or close it on your terms, after redeeming the rewards.