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Every once in a while, you might apply for a new credit card you ultimately decide you don't need. Maybe you were pressured to open a store card at check out, or you wanted to take advantage of welcome bonus but later decided the annual fee was too high.
If you're in this boat, you might consider simply not activating the card and hope the account just disappears. But your account is considered open the moment your application is approved — regardless of whether you activate the card.
Since opening a new account can have some impact on your credit score, you need to know what to do if you realize you don't want to activate your card and what options you have.
Below, CNBC Select review what happens if you don't activate a credit card and how that affects your credit score.
What happens if you don't activate a credit card
Your account is considered open from the date you're approved for the card. If you don't activate your card your account will still be open, you just won't be able to use it.
The one exception to that rule is if you opened a card with instant access, such as the Blue Cash Preferred® Card from American Express or the Prime Visa (see rates and fees), and received a temporary card number.
Your card issuer may reach out if you haven't activated your card after a certain amount of time, usually 45 to 60 days, to see if you received it. After that time, you may need to request a new card if you want to activate it.
How not activating a credit card affects your credit
When you apply for a credit card, an inquiry typically appears on your credit report. This can ding your credit score roughly five points, though it will bounce back soon. Whether you activate your card or not has no direct affect on your credit.
But if you don't activate your card, there are still a few things to keep in mind. For starters, you should be aware if your card charges an annual fee. Card issuers often charge annual fees on your first bill and every year on the anniversary of your account opening. The fee shows up on your balance in most cases, and if you forget about it, the fee can easily become a missed payment.
If you skip card activation and don't use your card, you're still responsible to pay for the annual fee. Missing the annual fee payment can hurt your credit score since payment history is the most important factor in calculating your score.
You should also consider how opening a new card affects your credit utilization rate, which is the ratio of your total debt to total available credit. A new card provides a new credit limit and if you never use your card, the added credit limit can help lower your credit utilization rate.
For example, if you currently have one card with a $3,000 balance and $4,000 credit limit, your utilization is high at 75%. But say you open a new card with a $6,000 credit limit and never use it, your total utilization would drop to 30% — which experts consider ideal, though 10% is even better.
While not using your card can help your utilization, it may impact your account status. If you don't activate a credit card and thus don't use the card, your account may be closed. Card issuers typically close accounts that aren't used within a certain time period, usually over a year. This may happen without notice and can hurt your credit, so you should take action prior to automatic account closure, which we explain below.
Bottom line
If you change your mind and don't want a card that you recently opened, it's smarter to call the issuer to cancel the card than just ignoring it. You might get hit with an unexpected annual fee, or the card will be closed because the issuer considers your account inactive.
If the card has an annual fee another option is to call your card issuer to see if you can downgrade to a no annual fee card.
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