Getting a new credit card can be exciting. It provides a handy financial tool to help manage your money. Credit cards allow you to make purchases or access cash instantly without having to carry around a lot of physical currency.
When used responsibly, credit cards are an excellent way to buy what you need without draining your bank account and going into debt.
However, many people wonder if simply receiving a new credit card and not activating it could potentially hurt their credit scores. Here’s what you need to know.
How do banks process credit card applications?
When a credit card issuer approves your application for a new card, they will first pull your credit report and conduct a hard inquiry on your credit history. This hard inquiry causes a small, temporary dip in your credit score initially.
However, whether you activate the new card or not does not directly impact your credit score. So, leaving a new credit card unactivated for a while has no further effect on your credit, besides the initial hard inquiry that occurred during the application process.
What happens if you don’t activate your new credit card?
Even if you don’t activate your new credit card, there are a few important points to consider.
First, be aware if your card charges an annual fee. Many card issuers will bill you the annual fee on your first statement and then annually on the anniversary of opening your account.
Typically, the annual fee gets added to your account’s balance. If you forget about it because you aren’t using or monitoring the card, the unpaid annual fee can quickly become a missed payment. And missed payments can significantly hurt your credit score.
So note any potential annual fees and make sure to pay them on time, even for an inactive card.
Activate cards promptly.
If you plan to use the plastic, it’s important to activate the new card in a reasonable time frame, around 30-60 days after receiving it. Leaving a credit card perpetually inactive and unactivated could prompt the issuer to eventually close the account, which would then impact your credit by lowering your total available credit.
Moreover, activating a new card notifies the card issuer that the card has been received by the intended and legitimate recipient. This activation process is designed to help prevent fraudulent usage of the card.
If you’ve had the new card for a couple of months and have no plans to use it, you may want to call the issuer and ask about the policy for non-activated cards. Others don’t call the card issuers and just destroy the cards to avoid unauthorized use.
Don’t activate your new card unless you intend to use it.
Getting a new credit card approval and hard inquiry causes a small, short-term credit score drop initially. However not activating that new card has no additional impact on your score in the short term. If you have plans to use the card, just be sure to activate it within a reasonable time frame to avoid potential account closure down the road.
This is good to know. I forgot to activate my new credit card in the past, and now I know I shouldn’t do that. I’ll be sure to activate or close the account immediately.
I know I have missed activating on time though I do activate always (a couple weeks later or so) Your post is a good cautionary post of ensuring that we should and why too..
I actually had no idea that banks would still charge the annual fee even if you don’t activate the card. I have one that is not activated. I will check with my bank tomorrow. THANK YOU SO MUCH.