Find out If You Should You Close an Unused Credit Card

A woman cuts up a credit card
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As you get new credit cards or you begin to pay off debt and cut back on credit card usage, some of your credit cards may go unused. Is it worth it to keep these credit cards or should you close unused credit cards?

Creditors May Close An Unused Credit Card

Some credit card issuers proactively close inactive credit cards after the cards have gone unused for a certain period of time. The specific time period varies by credit card issuer, but after 12 months of no use, it’s safe to assume your credit card is at risk of being closed. If you don’t want that to happen, use your credit card at least once a quarter to keep it active and open.

Don't Lose a Credit Score Boost

Credit cards play a major role in helping you build a good credit score. A credit card with a large amount of available credit can help boost your credit score because it lowers your credit utilization – the ratio of your credit card balances to their credit limits. Closing a credit card with available credit could hurt your credit score by removing that open credit from the credit utilization calculation.

Age of credit is another factor to that comes into play when you’re considering whether to close an unused credit card. Having old accounts on your credit report helps your credit score because it shows that you have more experience with credit.

Credit bureaus will report credit cards closed in good standing for about 10 years, so take that into consideration when you’re deciding whether to close a credit card.

Ditch the Credit Card You Used for a Discount

Offering a same-day discount on purchases is a retail stores' favorite way to incentivize credit card signups. You wouldn't be the first person to sign up for a store credit card solely for the discount or to take advantage of an interest-free period, especially on a large purchase.

Since the best perks are offered to new customers, there's little reason to keep a store credit card open. Once you've paid off the balance, closing one of these credit cards won’t cause too much damage to your credit score. Plus, retail credit cards, especially those that aren’t co-branded with a major credit card issuers, typically aren’t the best credit cards to have in your wallet.

When the Cost Outweighs the Benefit

While leaving a credit card open can help your credit score, it’s not always worth it. For example, if you have an unused credit card that’s charging you a high annual fee, you should use it or close it. Paying a fee on a credit card you’re not using is a waste of money.

Do You Have Better Credit Cards?

What counts as “too many credit cards” may vary from one person to the next. We don’t know the exact number of credit cards that are best for your credit score. But, if your credit cards are unmanageable, closing the ones you aren’t using will make it easier to keep your finances on track.

Steps to Close Your Unused Credit Cards

If you ultimately decide to close an unused credit card, it’s best to pay off the balance first. Then, call your credit card issuer and request to have the credit card closed. You can follow up with a letter reiterating your desire to close your credit card. In a few months, check your credit report to confirm the credit card is reported as closed.

Before closing a credit card make sure it's not your oldest account, your only account, or the account with the highest credit limit. Keep a credit card like this open and active to maintain a good credit score.

Article Sources

  1. Equifax Knowledge Center. "Inactive Credit Card: Use it or Lose it," Accessed Feb. 29, 2020.

  2. myFICO. "When Do Credit Card Issuers Close Down Inactive Accounts," Accessed Feb. 29, 2020.

  3. Experian. "When Are Closed Accounts Deleted," Accessed Feb. 29, 2020.

  4. Credit One Bank. "How Many Credit Cards Are Too Many," Accessed Feb. 29, 2020.