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3 reasons to keep credit cards active

by Mary Ann Campbell

The world of credit cards has turned upside down since the mortgage meltdown and resulting credit crunch. You used to be able to have a card or two in reserve and not worry about them becoming dormant. Not anymore. If you don't use it, you may well lose it and not be able to open that particular credit card again.Therefore, consider using dormant cards once every three or four months. Pay the balance in full to avoid interest charges.

Automate account activity

You might link the card to one of your utility bills and have the payment automatically drafted from your bank account to make sure your card is used and always paid on time. A caveat about using automatic billing and drafting is that something could be wrong and you won't know it until late in the game. At least open your bills to see that your utilities are consistent and correct. I once had a water leak, unknown to me because I wasn't opening my utility bills regularly. It took me a long time to get it straightened out once I discovered the problem.

Closures count on credit scores

Your credit score can be negatively affected if you close your credit cards. Even if you don't particularly need or want a credit card, your credit score connects many other areas of your financial life.

Credit scores can be used for setting some automobile insurance rates, allowing you to get a cell phone, rent an apartment or land a job. Your score can be important to you when you least expect it. Keeping at least one credit card active and paid on time puts you in a strong position, and cycling any other credit cards you own will be worth the effort.


Published 06/21/11 (Modified 11/20/13)

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