Should You Cancel Your Unused Credit Cards?

Is it Bad to Have a Credit Card You never Use?

Whether or not to cancel unused credit cards is a question that many cardholders normally ask themselves. When you are issued with these cards, you are supposed to use them so that they can continue being active.

Is It Better to Cancel Unused Credit Cards

Many credit card issuers usually close the cards when they stay dormant for a certain period of time, normally twelve months for most of them. You should use your cards at least once a quarter if you want them to remain active and open.

But what if you have unused credit cards that you do not plan on using anymore? Do you cancel them or keep them? This is something that you need to seriously think about before you act.

Two Things to Consider Before Cancelling Unused Credit Cards

1. Consider the Available Credit

Credit cards contribute a great deal to boosting your credit score. If the unused credit card has a large amount of available credit, it can help improve your credit score since it lowers your credit utilization.

Closing such a credit card may do more harm than good to your credit score.

2. Consider the Age of Credit

The age of credit is another important factor you should seriously think about when considering whether or not to close your unused credit cards.

Old accounts on your credit report are very beneficial. They can help with your credit score because they show that you are more experienced with credit.


Related: What Has the Biggest Effect on Your Credit Score?


Three Types of Unused Credit Cards You Can Cancel

If you have to close unused credit cards, they should be the ones that you opened just to get a discount, those that are costing you and not benefiting you, and those that are not as beneficial as others in your wallet.

Unused Credit Cards

1. Unused Credit Cards You Opened To Get a Discount

Most retail stores usually provide initial discount on purchases as a way of getting credit
card signups. If you have ever signed up for such a credit card but you do not use it anymore, you can go ahead and close it.

Closing such cards will not cause a lot of damage to your credit score. Also, retail credit cards are not the best to have, especially those that are not co-branded with the major credit issuers.

2. Unused Credit Cards that are Costing You and Not Benefiting You

Even though leaving unused credit cards open can have a positive effect on your credit score, it will not be worth it to leave a card open if it is costing you instead of benefiting you.

For instance, if you have an unused credit card that requires you to pay an annual fee, it will be better to close it than to leave it open.


Related: How Can I Raise my Credit Score in 30 Days?


3. Unused Credit Cards that are Not As Good As the Other Cards You Have

The number of cards that are best for your credit score may be totally different from the number of cards that are best for someone else’s credit score.

However, if you find that the cards you have are unmanageable, it will be easier to close the ones that you do not use anymore to make it easier to keep your finances on track.

Bottom Line

When you decide to close a credit card that you do not use anymore, it is a good idea to pay off any balance it may have first. After that, you can call your issuer and ask them to close the card.

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