How Long Should You Keep Your Credit Card Open?

A couple cuts up a credit card
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You may have read that closing a credit card can hurt your credit score, but does that mean you have to leave credit cards open forever just to protect your credit score? How long should you keep a credit card open?

New Credit Cards

If you’ve just started using credit and recently got your first credit card, keep that card open for at least 6 months. That’s how long it takes for you to build enough credit history to calculate a credit score.

Keep your first credit card open at least until you get another credit card.

Rewards Credit Cards

With many rewards credit cards, closing your credit card forfeits any unused rewards. If you racked up a nice sign up bonus or you’ve accumulated rewards over several months, keep your credit card open long enough to use your rewards.

Unused Credit Cards

Unused credit cards carry a risk of fraud and if you are not using the credit card it may take you longer to detect fraudulent charges. Plus, your credit card issuer may inactivate or cancel your credit card if it goes unused for several months. Use your credit cards periodically and always read your billing statements, even if you think you have a zero balance.

Secured or Other Credit Cards for Bad Credit

Rebuilding a bad credit history sometimes means accepting credit cards with high interest rates, low credit limits, annual fees, or security deposit requirements.

While these credit cards are great for proving that you’ve rehabilitated your bad credit habits, they’re not keepers. Don’t keep this kind of credit card open once you’re able to qualify for something better. Your goal should be to continually build your credit and qualify for better and better credit cards.

Low Limit Credit Cards

Credit cards with low credit limit are also candidates for being closed, especially if you have other credit cards with higher credit limits. It's not that the low limit credit cards are hurting your credit score, just that these credit cards with low limits aren’t benefiting you. It's likely that your low limit credit cards are store credit cards with high interest rates and aren’t the most attractive credit cards in the first place. Plus, the credit scoring calculation gives less weight to store credit cards, so you’re not getting a big boost from having them.

After a Late Payment

While you’ll be charged a late fee if your payment isn’t received by the due date, the credit bureaus aren’t notified until your payment is at least 30 days past due. Two late payments, however, can lead to an interest rate increase that will last a minimum of six months. If your credit card terms allows the credit card issuer to leave the penalty rate in effect indefinitely, you may consider paying off the balance and closing the credit card. Keep in mind that closing your credit card doesn’t erase the credit history from your credit report. The late payments will still be reported for the seven year credit reporting time limit.

Credit Score Impact

Deciding not to keep a credit card open can impact your credit score, especially if your credit card had a nice amount of available credit. Your credit score benefits from low credit utilization; when the ratio of your credit card balances to their credit limit is low. This kind of credit card helps your credit score the most when some of your other credit cards have balances; the available credit on one credit card lowers your overall credit utilization. But if all your credit card balances are low, i.e. below 30% of the credit limit, closing one card shouldn’t hurt your score too much.

Reviewing Your Credit Cards

Keeping your credit cards open won’t hurt your credit score. Review all your credit cards periodically to compare the terms on each. You may consider keeping those with low interest rates, best credit limits, or the best rewards program and closing the rest.