Credit cards often come with a variety of benefits that cardholders might not fully utilize. Among these are dormant or inactive credit cards, which, if used wisely, can offer significant advantages. Here’s how you can make the most out of your inactive credit cards.
1. Boost Your Credit Score
Keeping credit cards open and occasionally using them can positively impact your credit score. A major factor in your credit score is your credit utilization ratio, which is the percentage of your total available credit that you’re using. By keeping inactive cards open and maintaining a low balance, you effectively lower your credit utilization ratio, which can boost your credit score.
2. Avoid Account Closure
Credit card companies might close inactive accounts due to a lack of use. To prevent this, consider setting a small recurring charge on these cards, such as a monthly subscription. This keeps the account active without requiring you to remember to use the card regularly.
3. Utilize Rewards and Perks
Many credit cards offer rewards programs and perks that go unnoticed. For instance, some cards provide cash back, points, or miles for every dollar spent. Check the benefits of your inactive cards to see if you’re missing out on any rewards. Even small purchases can accumulate significant rewards over time.
4. Emergency Backup
Having a dormant credit card can serve as an emergency backup in case your primary card is lost, stolen, or compromised. It's always good to have a secondary card available for unexpected situations. Make sure the card’s expiration date is current, and the credit limit is sufficient for emergencies.
5. Promotional Offers
Occasionally, credit card companies offer promotions to encourage card use, such as extra rewards points or cash back. Keep an eye on communications from your credit card issuers to take advantage of these offers, which can provide additional value.
6. Balance Transfers
Some inactive credit cards may have promotional balance transfer offers with lower interest rates. This can be a good opportunity to transfer a high-interest balance from another card, saving you money on interest payments.
7. Special Benefits and Protections
Review the special benefits and protections that come with your inactive cards. Some cards offer travel insurance, purchase protection, or extended warranties on items bought with the card. For example, you might find that your inactive card offers complimentary travel insurance when booking a stay at a New York hotel.
Conclusion
Inactive credit cards don’t have to be a waste. By strategically using these cards, you can improve your credit score, avoid account closure, take advantage of rewards, have an emergency backup, benefit from promotional offers, and utilize special protections. Always stay informed about the benefits your cards offer and make them work for you.
