Keep a no-fee card open; it helps your utilization and credit history. Close it only for a fee you can't justify, overspending or a joint account. If you keep it, use it occasionally so the bank doesn't close it anyway.
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Almost everyone has one: a credit card you never use. Maybe it was your first card, a store card from a one-time discount, or a card you replaced with something better. Should you cancel it, or keep it open?
For most people, the answer is to keep it, especially if it has no annual fee. But there are good reasons to close a card in some situations. Here's how to decide, the questions to ask first, and how to keep a card you're holding onto from being closed by the bank anyway.
The quick answer
Keep it open if the card has no annual fee and you can trust yourself with it. An open card adds to your available credit, helps keep your utilization low and keeps building your credit history.
Consider closing it if it charges an annual fee you can't justify, it tempts you to overspend, or it's tied to someone you no longer want to share credit with.
Why keeping an unused card usually helps
It lowers your credit utilization
Your credit utilization ratio compares your balances to your total limits. Every open card raises your total limit, which lowers your utilization, part of the "amounts owed" category that makes up about 30% of your FICO® Score. Closing a card removes that limit.
It keeps your credit history longer
The length of your credit history counts for about 15% of a FICO Score. A closed card stays on your report for up to 10 years if it was in good standing, but after that it drops off. If it's your oldest account, closing it can eventually lower your average account age.
It's a backup when you need it
An emergency, a lost wallet, or a card frozen for fraud is when a spare card proves its worth.
For the full breakdown, read Does Closing a Credit Card Hurt Your Credit?
Questions to ask before you close a card
- Does it have an annual fee? If not, there's rarely a financial reason to close it.
- Is it my oldest card? Old accounts are especially valuable for your history.
- How big is its limit? A large limit has a bigger effect on your utilization.
- Do I carry balances on other cards? If so, losing this limit raises your utilization.
- Am I about to apply for a loan? Avoid closing cards before a mortgage, auto loan or other big application.
- Do I have unredeemed rewards? Use them first, because they may be forfeited.
When closing a card makes sense
- The annual fee isn't worth it. First, call the issuer and ask about a downgrade (sometimes called a "product change") to a no-fee card. That can keep the account and its history open without the fee.
- It's causing you to overspend. Your financial health matters more than a few points. Some people solve this by keeping the card open but locking it away and using it only for one small automated charge.
- It's a joint account you need to separate. After a divorce or breakup, closing or separating joint accounts can protect you.
- You have many cards and plenty of available credit. If you already have a long history and low utilization, closing a newer, low-limit card may have little effect.
If you decide to close it
- Pay the balance to $0 and redeem any rewards first.
- Move any recurring charges to another card.
- Call the issuer, confirm the closure and ask for written confirmation.
- Check your credit report afterward to be sure it shows "closed by consumer."
If you keep it: don't let the bank close it for you
Here's the twist: deciding to keep a card isn't enough. If you don't use it, the issuer may close it anyway due to inactivity, often without warning. That has exactly the same effect on your credit as closing it yourself. Learn more in Credit Card Closed Due to Inactivity?
The fix is regular, tiny activity. Credicated places a small charge on each card on the schedule you choose:
It's the perfect fit for the card you're keeping "just for the credit." You never have to carry it or remember it, and with autopay the charge is paid automatically. That also adds a steady stream of on-time payments, which may help your score over time.
Frequently asked questions
Should I cancel a credit card I don't use?
Usually not if it has no annual fee. Keeping it open supports lower utilization and a longer credit history. Just keep it active so the issuer doesn't close it.
Should I close my oldest credit card?
Generally no. Your oldest card anchors your credit history. If it has a fee, ask about downgrading to a no-fee version instead.
Is it better to cancel unused credit cards or keep them?
For most people with no-fee cards, keeping them open and lightly active is better for their credit.
Will my credit score go up if I close a card?
Closing a card rarely raises your score. More often it has no effect or lowers it, mainly through higher utilization.
This article is for general educational purposes and isn't financial advice. Credit scoring models and individual results vary.
Deciding to keep a card isn't enough. If you don't use it, the issuer may close it anyway.