Milvionne Chery Copeland, Writer
@milvionne_copeland
It is better to keep unused credit cards open than to cancel them because even unused credit cards with a $0 balance will still report positive information to the credit bureaus each month. It is especially worthwhile to keep an unused credit card open when the account does not have an annual fee.
Still, there are times when it may be beneficial to close your credit cards, such as to avoid expensive annual fees. And if you’re worried about your credit score, you can use WalletHub’s free credit score simulator to see the potential impact closing a credit card will have
Why It Is Better to Keep Unused Credit Cards
Just keeping unused credit cards open helps your credit by maintaining the total amount of credit you have available and preserving the length of your credit history. If you don’t use a credit card, your account will still get reported to the credit bureaus as being in good standing every month, assuming you have a $0 balance. This will continue to add positive information to your credit reports, helping your credit score.
On the other hand, when you close a credit card, especially if it’s one of your oldest credit accounts or one that has a high credit limit, your credit score will likely suffer a bit.
When It Is Better to Cancel Credit Cards
Despite the potential for credit score damage, it is important to remember that there are a few situations when it might be better to close unused credit cards rather than leave them open. If your unused credit card charges an annual fee, for example, and you don’t need your credit score in its best shape for a while, it’s probably best to save the annual fee and close the account.
On the other hand, if you want to cancel your credit card because you are concerned about overspending, try locking it away in a safe place first. If that doesn’t work, it will likely work out better for you and your financial future to close the credit card account, even if your credit score takes a hit.
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People also ask
Why should you never cancel a credit card?
You should avoid canceling a credit card because it could hurt your credit score. Credit cards you manage responsibly, even unused cards with a $0 balance will still report positive information to the credit bureaus each month. It is especially worthwhile to keep a credit card open when the account does not have an annual fee.
Still, there are times when it may be beneficial to close your credit card. For example, when you have an unused card with an annual fee or you have too many cards to...
read full answer by Maria Adams, Credit Cards ModeratorDoes closing a credit card hurt your credit?
Yes, closing a credit card does hurt your credit score in the short term, depending on how old the accounts are and how much other credit you have. But canceling a credit card account might also benefit your credit score in the long run if you manage the rest of your finances better as a result of having one fewer account to worry about.
You can estimate the effect of canceling a credit card...
read full answer by Mary Grace McCormick, Credit WriterHow many credit cards is too many?
The number of credit cards that’s “too many” to handle differs from person to person. Too many credit cards for most people could be six or more, as the average American has a total of five credit cards, but it ultimately depends on how well you can manage one credit card, then two, and so on. Everyone should have at least one credit card for credit-building purposes, though, even if they don’t use it to...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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