dcsimg Credit Card Inactivity Fees: You Pay for Not Using your Card - indexcreditcards.com

Credit Card Calculators

How long will it take to pay off my credit card?

In the News
  • "As comprehensive a list as you'll find of all the credit card offers on the table now."

Credit Card Inactivity Fees: You Pay for Not Using your Card

by Barbara Marquand
Credit Card Inactivity Fees: You Pay for Not Using your Card

You’ve heard about the myriad of fees you pay to use credit cards, from annual fees for maintaining accounts to balance transfer fees for moving one credit card balance to another.

But if you’re thinking about putting your credit cards away, consider this: Now some credit card companies are charging inactivity fees for not using cards.

Saying No To Credit Card Use Might Cost You

Although not widespread yet, inactivity fees, which are as high as $36 a year, are more common than a year ago, according to “Dodging Reform,” a report by the Center for Responsible Lending. None of the top eight credit card issuers have added the fees, but five other issuers charge inactivity fees or “account management fees” for having a balance on a closed account. In addition, credit card companies sometimes cancel credit card accounts that remain inactive for more than a few months.

So what does this mean for you?

Opting Out Under New Credit Card Terms

• Under the CARD Act, you have the right to opt out of an account if the issuer proposes new terms, such as an interest rate hike. You’ll then be able to pay off the balance on the card according to the original terms, but you won’t be able to make any new transactions. Effectively the account is closed. Be aware that as a result, the card issuer might charge an “account management fee,” even though you closed the account because of the proposed changes by the card issuer.

• To keep an account active, charge something small and pay it off completely each month. For instance, set up automatic bill pay for one of your monthly bills on the credit card.

How Many Credit Cards Do You Need?

• Financial experts have long preached the wisdom of maintaining only the number of credit cards you can manage responsibly, and with the growing number of fees, that advice holds up well. Most people require only two or three credit card accounts. Don’t apply for more cards than you need.

With new regulations, the credit card landscape is shifting every month. Carefully read all your credit card statements and notices, and pore over the fine print when you apply for a new credit card to understand the terms and conditions.

Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.

Published  (Modified )

Share this article with: