Zero Balance Card

You know that credit card you haven’t used in forever? That old one that you didn’t cancel, because it might just be better for your credit score to keep it? It might be a zero balance credit card.

A zero balance credit card is one where you don’t owe any money on it, and there are no pending transactions.

The most common types of zero balance cards are ones like above (the semi-retired type) or new cards that just haven’t been used.

Why is this term a thing? Well, credit card companies used to charge people for “inactive” credit cards. Because banks like to slap on fees. The Credit CARD Act of 2009 shook its finger at credit card companies and said “no more free money for you!”

If you have a zero balance card that doesn’t have an annual fee, it’s cool. Keep it. Having a higher “credit utilization” (the amount you’re approved to spend on all of your credit cards and other credit tools) is better for your credit score. Zero balance cards make your credit card say “I woke up like this.”