Digital Wallets Are Growing, and Your Old Cards May Suffer

In May 2026, Atlanta Fed researchers reported that phones and tablets were used for 14% of in-person payments in 2025, up from 11% in 2024. For you, the catch is that every tap still charges one specific card, usually your wallet's default. Cards you rarely pick can sit idle, and Citi's own guide warns that prolonged inactivity may lead to a lower credit limit or a closed account. Neither step needs advance notice, and either one can push your credit utilization up and lower your credit scores, even though your spending hasn't changed.

Key takeaways

More than 72% of consumers paid by phone at least once in the year to October 2025, yet cards still made up about two-thirds of all payments by number.
A phone payment is a card payment. The wallet sends a stand-in number (a token) linked to your card account, so using an older card through the wallet counts as using that card.
Chase's sample agreement says Chase may close an account and may change the credit limit at any time; a Citi agreement lets it close or suspend an account for any reason or none. Regulation Z requires no advance notice of a closure or a limit cut. Notice is required only before an over-limit fee or penalty rate is charged because of the lower limit.
In an illustrative case, closing an unused card with a $6,000 limit raises utilization from 12% to 20%. A closed account in good standing can stay on your credit reports for up to 10 years, so the hit to the age of your accounts comes later, if at all.
A payment-app company is never FDIC-insured itself. Money left in the app can qualify for pass-through FDIC insurance only if the company has placed it at an insured bank and met specific conditions.

What it means for you

People who pay mostly by phone: your wallet's default card tends to get most of your taps unless you switch cards. Other cards stored in the wallet get no activity unless you pay with them.
People with older credit cards they rarely use: your issuer can close the account or reduce the limit, sometimes with no warning. The immediate cost is a higher utilization ratio if your other cards carry balances, as the worked example shows; a small recurring charge is the simplest defense.
People with debit cards linked to wallets: payments from a debit card in a phone still draw on your bank account, so Regulation E's limits on unauthorized transfers apply. Money left in a payment-app balance may be less protected.
People with thin credit histories: with only one or two cards, losing one usually removes a bigger share of your total credit limit, so your utilization ratio can jump more. The FAQ explains how losing your only card can affect whether you have a FICO Score at all.

What the Fed's payment data shows

Two Federal Reserve reports came out in May 2026, both based on consumers recording every payment they made over three days in October 2025. The Atlanta Fed's summary results found that more than 72% of consumers had paid with a mobile phone at least once in the previous 12 months. The report says the share of in-person payments made with a mobile device (a phone or tablet) rose from 11% in 2024 to 14% in 2025. The same report also puts mobile's share of in-person purchases at 11%, so the exact figure depends on the measure. The direction is clearer: the survey recorded an average of 17 mobile payments per consumer, up from 15 in 2024. Consumers made about 47 payments a month, with 16 on credit cards and 15 on debit cards.

The 2026 Findings from the Diary of Consumer Payment Choice, released May 11, 2026, show that the cards behind the phone are as important as ever. Debit cards were the preferred way to pay in person for 40% of consumers and credit cards for 38%. Neither report measures card closures. The risk to older cards comes from how wallets choose a card, described below, not from the Fed's data.

The Diary's method explains why. The 2025 edition says the rise in phone payments came from people making card or bank (ACH) payments with their phones, not from storing money in payment apps. A tap using a phone's NFC chip is counted as a credit, debit or prepaid card payment. Wallets are a new way to use your cards, not a replacement for them.

How a wallet uses your cards

When you add a card to Apple Wallet, the card issuer creates a device-specific Device Account Number, which is stored in a secure chip on the phone. At checkout, the phone sends that number and a one-time security code instead of your card number. This substitute number is called a token. Behind it is the same card account, with the same limit, statement and issuer.

Wallets also pick a card for you. Apple says the first card you add becomes the default on that device. You can change the default or pick another card at checkout. If you never do, your taps keep going to the default card, and the other cards in the wallet see no activity.

When a card is replaced

At Chase, a token usually survives a new card number. Chase's Apple Pay FAQ says that when a card is replaced because it was lost, stolen or expired, the new card is in most cases linked to the existing token automatically. If that fails, Wallet shows that the card isn't active, and you add the card again. Other issuers set their own process. On the network side, Visa's Digital Credential Updater is designed to keep tokens current when card numbers change. The CFPB's December 2025 credit card market report points to continued growth in digital wallets, including automatic provisioning of tokenized card credentials to them.

Closure works the other way. Apple says all Apple Pay transactions are routed to card issuers for approval. So once an issuer closes an account, it can decline wallet payments on that card just as it would decline the plastic card.

What issuers can do to idle cards

Card agreements give issuers broad room. A sample Chase Cardmember Agreement says Chase may close or suspend an account, sometimes "based not on your actions or inactions, but on our business needs." It also says Chase may cancel, change or restrict your credit limit at any time. A Citi card agreement allows closing or suspending an account "for any reason, or for no reason," at any time and without notice, as allowed by law.

No federal rule sets how long a card can go unused. Citi's guide to unused cards says there is no set inactivity period, and the threshold differs by card and issuer. The issuer may or may not warn you first, and an account carrying a balance generally won't be treated as inactive.

What Regulation Z requires

Issuer action	Advance notice required?	Rule
Closing the account or suspending further credit	No. These are exempt from change-in-terms notices.	§1026.9(c)(2)(v)(A)
Lowering the credit limit	Not for the cut itself. The issuer must give at least 45 days' notice before charging an over-limit fee or penalty rate solely because you went over the new limit. For a penalty rate, that notice must be in writing. An over-limit fee also requires that you opted in to over-limit transactions.	§1026.9(c)(2)(vi); comment 9(c)(2)(v)-1.i; §1026.9(g)(4); §1026.56(b)
Your right to reject a change	Applies only to significant changes in terms that need 45-day notice, such as a rate increase. It doesn't cover closures or limit cuts.	§1026.9(h)

Limit cuts are becoming more common for some borrowers. The CFPB's 2025 report, using data through 2024, found that credit line decreases on general-purpose cards have generally trended up since late 2022 for cardholders with prime and lower scores, with the biggest increases for near-prime and subprime borrowers. The report doesn't break these down by cause, so not all of them come from inactivity.

What a closed card does to a score

FICO groups its score factors by weight. "Amounts owed," which includes utilization, counts for 30%, and length of credit history counts for 15% (myFICO). Utilization is the share of your available revolving credit that you're using. VantageScore explains that utilization is calculated from the balances issuers report to the bureaus, which are often your statement balances, not from your current balances. It also says both your overall ratio and the ratio on each card are watched.

utilization (%) = total reported card balances ÷ total credit limits on open cards × 100

reported balances = what issuers sent to the bureaus, often statement balances
credit limits     = limits on open revolving accounts; a closed card's limit drops out

Illustrative example. A hypothetical cardholder has three cards. The oldest, opened in 2011, has a $6,000 limit and a $0 balance because it never gets used in the phone wallet.

Card	Limit	Reported balance
Old card (opened 2011)	$6,000	$0
Card B (wallet default)	$4,000	$1,200
Card C	$5,000	$600

All three open: $1,800 ÷ $15,000 = 12%.
Old card closed for inactivity: $1,800 ÷ $9,000 = 20%.
Old card kept but its limit cut to $1,000: $1,800 ÷ $10,000 = 18%.

On the ratio, the closure has the same effect as running up an extra $1,200 in balances with all three cards open ($3,000 ÷ $15,000 = 20%). Card B sits at 30% on its own either way. Paying balances down lowers the ratio again once issuers report the new balances. The effect depends on reported balances: if all three cards reported $0, the ratio would stay at 0% after the closure.

The age of your accounts works more slowly. FICO has said it continues to count a closed account in length of credit history while the account remains on your report. In that 2011 post, it described the usual effect of closing a card as none or a slight drop, and less likely to matter for people who keep balances low. Experian says accounts closed in good standing may stay on credit reports for up to 10 years. Equifax says a closed account paid as agreed can stay up to 10 years from the date the lender reported it. For the cardholder in the example, losing the oldest account would mostly show up years later. The utilization change shows up right away.

Debit cards and app balances

A debit card in a phone still draws money directly from your bank account, so Regulation E's rules on unauthorized transfers apply. Under §1005.6, your liability is capped at $50 if you report a lost or stolen access device within two business days of learning about it. It can rise to $500 if you report later. If you don't report an unauthorized transfer within 60 days after the bank sends the statement showing it, you can be liable for later transfers the bank shows would have been prevented. A credit card's liability for unauthorized use is capped at $50 under §1026.12(b).

Balances that stay in an app

Money received through a payment app often stays in the app until you move it out. Regulation E's definition of a prepaid account covers accounts that can hold loaded funds and are mainly used to pay merchants or send person-to-person transfers. There is a gap, though. If the provider hasn't completed identity verification on your account and has given the required risk notice, it doesn't have to apply the liability limits or error-resolution rules (§1005.18(e)(3)).

Deposit insurance is a separate question. The FDIC says nonbank companies are never FDIC-insured. Your money can become eligible for pass-through coverage only after the company deposits it at an insured bank, and records must show who owns how much; other conditions apply too. Deposit insurance doesn't protect you if the nonbank company itself fails. The CFPB's 2023 issue spotlight added that whether those conditions were met is decided by the FDIC or NCUA only after a bank or credit union fails.

Federal oversight of payment apps

The CFPB published a rule on December 10, 2024. It would have allowed the agency to supervise nonbank payment apps that handle at least 50 million consumer transactions a year. Congress disapproved it, and Public Law 119-11, approved May 9, 2025, says the rule has "no force or effect." That ended the supervision program the rule would have created. It didn't change Regulation E, which still covers prepaid accounts as described above.

Frequently asked questions

Can my issuer charge a fee because I stopped using my card?

Not a penalty fee. Regulation Z says account inactivity has no dollar amount attached, and card issuers can't charge a penalty fee for a violation with no dollar amount (§1026.52(b)(2)(i)(B)). An annual fee is different. Citi's guide notes that annual fees are charged whether or not you use the card.

Does an issuer have to explain why it closed a card?

Not under Regulation B if the reason is inactivity. Under that rule, closing an account or cutting its limit is "adverse action" unless it affects all or substantially all of a class of the issuer's accounts. Actions taken in connection with inactivity, default or delinquency on that account are excluded (§1002.2(c)), so no adverse action notice is required for them. For other reasons, the issuer must notify you within 30 days after acting. The notice must either state the specific reasons or tell you how to request them (§1002.9(a)). Separately, the Fair Credit Reporting Act requires a notice when an adverse action is based in whole or in part on information in your credit report (15 U.S.C. 1681m(a)). That notice must name the credit bureau that supplied the report and tell you about your right to a free copy of it.

Do my subscriptions keep working after my card number changes?

Sometimes, but it's your job to check. Visa runs Visa Account Updater so that participating merchants can refresh stored card details. Chase's sample agreement still says that if your account is closed or its number changes, you need to contact anyone you pay automatically, and Chase isn't responsible for those payments.

What happens to a checking account I no longer use?

If there's no activity or contact from you, usually for three to five years, the bank may treat the account as abandoned and turn the money over to your state, a process called escheatment (OCC HelpWithMyBank). Your bank may send a notice first and may charge an inactivity or escheatment fee if your account agreement allows it. You can claim escheated money from your state's unclaimed property office.

Could losing my only card leave me without a FICO Score?

Possibly, if the card is your only credit account. FICO needs at least one account open six months or more and at least one account reported to the bureau within the past six months. myFICO doesn't say how long issuers keep updating closed accounts. If yours stops reporting and you have no other account, your file could stop meeting the second condition. A loan or another card that is still reported would meet it.

A checklist for older cards

List the cards you haven't used in months. No federal rule sets an inactivity deadline, and Citi says the threshold differs by card and issuer, so don't assume you have plenty of time.
Give each one a small recurring charge. Move a bill you already pay, such as a $10 monthly subscription, onto the card so it adds no new cost. Set autopay to the full statement balance so it never costs interest.
Or use the card through your wallet. Every so often, make an older card the default or choose it at checkout. A phone tap counts as card use.
Read the "closing your account" section of each card agreement, and check every statement for a lower credit limit. Chase, for example, shows the current limit on the monthly statement.
Recalculate utilization without the card before applying for a mortgage or car loan, using the formula above.
After any card replacement, check that the wallet shows the card as active, then update merchants that store your card.
Move payment-app balances to an insured bank or credit union account once you receive them, and finish identity verification in any app where you keep money.
If an annual fee is the reason to close a card, ask whether the issuer will switch you to a no-fee card instead. Citi notes issuers may offer a downgrade rather than a closure.

This article is general education, not financial or legal advice. Your card agreement and your own credit file decide what applies to you.