3 Ways to Protect a Credit Card You Aren’t Using

This story originally appeared on The Penny Hoarder.

First, the good news: We as a country have reduced our credit card debt since the coronavirus pandemic began.

Revolving credit, which includes credit cards, has decreased for the past three months — by $24.3 billion in May alone — and that debt is now less than $1 trillion for the first time since September 2017, according to the Federal Reserve.

Now, the bad news: If you aren’t using your credit card, the whole out-of-sight, out-of-mind could wind up landing you in financial trouble — think lower credit scores due to inactivity and potential fraud.

To protect yourself from the dangers of an unused credit card, follow these safeguards.

3 Ways to Protect a Credit Card You Aren’t Using

By being unable to eat out or shop as often, we’ve had fewer excuses to pile more debt on our credit cards. And while paying down balances is a good thing, if you aren’t constantly pulling out the plastic, you may have shifted your thoughts to other more immediate financial concerns.

Use these strategies to avoid the financial pitfalls of not using your credit card.

1. Continue Using Your Credit Cards

If you’re still carrying a balance, you should continue making monthly payments. If you end up paying off a credit card, you have good reason to celebrate. Just do so responsibly. (Don’t put a huge expense on your card that lands you back in debt.) Then, continue using your card.

Continuing to use your card is important if you rely on it to build your credit score. Maintaining a responsible spending and payment schedule — rather than closing the account — affects three of the five factors that determine your credit score:

1. Payment history, which counts for 35% of your score.
2. Credit utilization, which counts for 30%.
3. Length of credit history, which counts for 15%.

Keeping a credit line open contributes to your credit history, but it can have an even bigger impact on your credit utilization — the total available credit you’re using.

For example, let’s say you have two credit cards each with $1,000 credit limits. You pay off one but still have a $300 balance on the other. If you keep both cards open, your credit utilization rate would be 15%. But if you close the credit card you paid off, your credit utilization would shoot up to 30%. The higher the utilization, the more it negatively affects your credit score.

But even if you don’t plan to close your credit card accounts, dumping all your cards in a drawer because you don’t need them could affect your credit payment history — also a big contributor to your credit score.

Instead of spending a bundle, keep manageable monthly subscriptions on your credit cards — think Netflix or Spotify — that you can commit to paying off every month. The amount you’re paying off doesn’t matter when it comes to your credit score — what does matter is that you’re paying off the balance each month on time.

2. Monitor Your Credit Limit

Everyone’s felt the effects of the pandemic, including the credit card companies. To reduce the chance they’ll be left on the hook for debt that borrowers can’t afford to pay back, many are cutting credit limits — less credit means less liability.

Unfortunately, that reduction could come at your expense — and in an unexpected and unfortunate way if you don’t monitor your credit limit regularly:

1. If you attempt to charge an item that exceeds your new credit limit, you could get socked with over-the-limit charges.
2. Your credit score could take a hit if the lower limit increases your credit utilization ratio.

By scanning your credit card statement every month or going online to check your limit, you can avoid getting socked with over-the-limit fees if your credit limit is lowered.

And if you do notice a credit limit decrease, here are four ways to fix it.

3. Regularly Check Your Recent Transactions

Personal story: I have four credit cards, but I only use one regularly. While I’m enjoying my coffee every Monday morning, I check with my cards’ apps for recent transactions. (I swear I’m more fun than I sound.)

Recently, one of my cards showed two charges, for a gas station and fast-food restaurant. Neither would have raised suspicion from my card issuer, but because I knew that card was safely tucked away, I could immediately report the card stolen.

Consumers filed 6,704 complaints of credit card fraud totaling $10.58 million between Jan. 1 and July 9, 2020, according to a FTC report.

If I had simply assumed that my cards were safe because I wasn’t using them, I could have wound up with a nasty surprise at the end of the month — or worse, if I hadn’t bothered to open my statement and gotten socked with late fees.

Moral of the story: Even if you aren’t using them, check in with your credit card accounts regularly to prevent fraud and theft.

If you haven’t been using your card the past couple of months — or you have avoided looking at the balance — you may not be monitoring transactions as closely.

By downloading the official apps for each of your cards, you’ll have immediate access to your card information, including the customer service contact, as well as tiny reminders of the cards that may not be in your wallet but still need your attention.

And once you do have the opportunity to spend money again, you can use these lessons to avoid falling back into bad habits.