Topics:Credit Cards 101
Guest Post by CreditRepair.com
We live in a world of credit, with millions and millions of new credit cards being issued each year—providing consumers with instant financial flexibility and convenience.
If you’re like most of us, you’ve amassed a wallet full of cards, some of which have become your go-to tools for daily necessities.
Others, not so much. Maybe a department store card you signed up for but found you didn’t use that often, or a higher-interest card you might applied for during a time of financial need, that now sits idle in a dresser drawer or deep in your filing cabinet.
While those cards are essentially in a holding pattern, ready when needed, smart consumers need to be aware of the potential for scammers and fraud artists to take advantage of their half-forgotten status and do some serious damage to your credit.
It’s hard enough nowadays keeping on top of your active financial obligations, including bank loans, internet and utility bills, or even student loan payments, and scammers are hoping that your slightly overwhelmed status will mean an inactive card might not get the attention it deserves.
While physical security is still important (do keep the cards in a safe place, and neer keep documentation of PIN numbers for cash advances in the same place, in case that all falls into the wrong hands), your best defense is vigilance.
And while your inactive credit card may not even warrant a monthly statement from the issuing company—enough months of a zero balance and the news starts to get stale after a while—it’s important to keep an eye on those idle resources.
If that means occasionally logging onto a credit card website or signing up for spending alerts, it’s probably worth the five minutes it takes to log on and make yourself aware if there’s any unauthorized usage.
You may believe that chopping up an unused card is also a good preventative measure, but that may not be the best strategy for fixing your credit.
While excessive balances can certainly drag down your score, credit bureaus (the companies that measure and track your credit usage, your credit history, and your credit inquiries, use the age of credit card as a positive factor.
An older card, even one not carrying a balance, is proof that you’ve been careful in your credit usage. Even better, a small, occasional purchase, paid off immediately, demonstrates that the card is still active, which can be an additional credit-building gesture.
Another key strategy is active credit monitoring. Your credit report can give you an accurate picture of larger trends in your credit usage, and will let you know if an inactive card is suddenly active again, which may be a sign of a data breach.
It can also let you know if a credit company or department store has decided to cancel the card due to inactivity, which occasionally occurs.
Whatever you do, remember that your credit resources are valuable and that it’s vitally important to be aware of the cards you do have and how they’re being used.