hi. my name is john ulzheimer, and i am a credit expert who contributes to creditcardinsider.com. if you have anyquestions for us please leave them in the commentssection below. today's question comes from a youtube user with the screen name spike ubiquity. and this is spike's question... how oftenshould i use my credit card?
How Many Numbers Are On A Credit Card, awesome question. first off, i'm glad you have a credit card. credit cards are unfairly demonized by some very vocal consumer advocates, and users of cards. which is a little unfairbecause they're a very
safe form of transacting. and as long asyou're responsible with them, they're very inexpensive.in many cases it's free to use a credit card. so howoften should you use it? well, there really is no minimum requirement for usage of a credit card. you can use it for luxuries. you can use it for necessities. and you can use it forconvenience, meaning having things just auto-billed against a credit card that you're gonna have to pay for anyways.
things like, you know, your gym memberships, magazine subscriptions your cell phone bill, things like that. some consumers choose to go the opposite direction and they use it for everything possible, everything possible if they'regoing to buy. and those are the types of consumers who are using it to load up on rewards points. so really it's a matter of personal preference. here's something tokeep in mind... the credit card issuer makes no money if you don't use the card, unless there'sa fee.
so if there's no annual fee on your creditcard, and you don't use it, then the credit card issuer actually loses money having you as acustomer. you're below the $0 line on the revenue curve for them. they will eventually close your account. they may close it after 3 months of activity. they may close it after 6 months of inactivity. they may close it after 2 years of inactivity. it's completely up to the credit card issuer. and there is nostandard in the credit card world, regarding how long you have to be inactive before thecredit card issuer will close the account.
the reason that they will eventuallyclose the account is because they are no longer allowed tocharge you inactivity fees. there actually was atime in the past where if you sat on your credit card formore than a few months without using it you would actually get assessed a fee, $30, $29. and that was an inactivity fee. the card act, which is the credit cardaccountability responsibility and disclosure act of 2009, made inactivity feels illegal.
so there are no more inactivity fees oncredit cards. and so the only alternative for the issuer is to close your card,because they don't want that extension of credit sitting out there not being used, however it is at risk. they would rather issue it to someoneelse who is going to use it, and obviously generate revenue. credit card issuersare for profit companies. they don't do what they do because of altruism. they do what they do because they want to make money. you know, fair, unfair whatever. that's perfectly fine with me.
it's very easy to control the cost of acredit card, because it's based largely on fees and interest. and you can avoid those very easily. so as far as inactivity goes, i would not allow it to go inactive for morethan a few months at any given time. charge something completely modestand almost immaterial on it: socks, pick up your dry cleaning, fill up your tank of gas, take your buddy out for lunch. dosomething to get some activity on the card, which generates revenue for thecard issuer in the form of interchange or the swipe fee, which is pickedup by the merchant, not by you.
and that will reset the clock of activity. then you don't really need to worry about, you know dormancy, and any sort ofproblems with the credit card issuer closing the account because of non-use. if you have any other questions pertaining to credit or financial topics, then please submit them to creditcardinsider.com or in the comments section below. have anice day!
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