Dr. Mary Ann Campbell, CFP® = "Dr. MAC"

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Keep Your Credit Cards Active

Tuesday, December 21st, 2010

The world of credit cards has turned upside down since the mortgage melt down and resulting credit crunch. You used to be able to have a card or two in reserve and not worry about them being dormant. Not anymore. If you don’t use it, you may well lose it and not be able to open that particular credit card again.

Therefore, consider using dormant cards once every three or four months and then paying the balance in full. You might link the card to one of your utility bills and have the payment automatically drafted from your bank account to make sure your card is used and always paid on time. One caveat about using automatic billing and drafting is that something could be wrong and you won’t know it until late in the game. At least open your bills to see that your utilities are consistent and correct. I once had a water leak, unknown to me because I wasn’t opening my utility bills regularly. It took me a long time to get it straightened out once I discovered the problem.

Your credit score can be negatively affected if your cards are closed. Even if you don’t particularly need or want a credit card, your credit score connects many other areas of your financial life. Credit scores are used for setting some automobile insurance rates, cell phone rates, for consideration on rental applications and job applications. It can be important to you when you least expect it. Keeping at least one credit card active and paid on time puts you in a strong position and will be worth the effort. Clark Howard shares his tips on cycling your unused credit cards at http://clarkhoward.com/liveweb/shownotes/2008/07/02/13728/.

For the most comprehensive list of current credit card offers, listed by category, go to www.IndexCreditCards.com. Bring those dormant credit cards to the front of your wallet and improve your credit score.

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