Ask Finder: What happens if I don’t activate a credit card?
Could your credit card account technically be opened before the card is activated?
I applied and was approved for a credit card but have changed my mind about it. I just got the credit card in the mail and I’m wondering what would happen if I don’t activate it at all? Will the account be set up and will I have to pay the annual fee? Also, how will it impact on my credit history?
First of all, you can’t use any new credit card until you've activated it. The card’s activation date is also typically when the annual fee would be charged.
As far as account set-up goes, there is a grey area around how and when this step happens. While this process varies by provider (or even product), it is possible the credit card account could be established once your application is approved.
There isn’t a lot of clear information from providers around this, so I double-checked with ASIC to find out what’s possible.
“If approved for a credit card, an account may be set up prior to the consumer activating the credit card,” an ASIC spokesperson said.
This makes sense from a purely practical point of view, as the provider would need to have everything ready to go for people that want to start using the credit card straight away.
As you don’t want to activate or use this particular credit card, you should call the provider as soon as possible and explain that you have changed your mind and are no longer interested in the account.
In most cases, this will void the card and the account before you have accepted it. However, ASIC did note that there could be exceptions.
“Generally activating or making a transaction with the card will be acceptance of the credit card contract but it will depend on the particular circumstances, including the relevant terms and conditions.”
So, basically, make sure you read the fine print when you apply for a credit card so that you know exactly what you’re agreeing to at the time (as well as the next steps).
As far as your credit file goes, the application will be listed regardless of whether you are approved for the card. The account details (including your credit limit) are unlikely to show up before you have activated a card – especially if you contact the provider soon after the application is approved.
If you're wondering exactly what details are on your credit history right now, you can check your credit file and score for free through Finder. Or, if you’re ready to get another card, start by comparing the latest offers to find one that works for you.
Ask Finder is a regular column where Finder's expert writers answer your questions. All rates and fees are correct at time of publication and we only give general advice.
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