Many people wonder what to do with credit cards they don’t use anymore. Is it better to cancel them, or does keeping old cards help your credit more? This isn’t just a curiosity—your decision could shape your credit score and even your future loan options. If you’ve ever stared at a pile of old plastic, you’re definitely not alone.
The Credit Score Impact: Canceling vs. Keeping Unused Credit Cards
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Everyone wants a strong credit score, but few realize how much unused cards play into this. The two main drivers are the amount of credit you have available and the length of your credit history.
How Keeping Unused Cards Can Help Your Credit Score
Unused credit cards act like anchors for your credit score. They do this in two big ways:
- Lowering Your Credit Utilization Ratio: The more available credit you have compared to what you use, the better. If you close a card with a high limit, your credit utilization ratio jumps—even if you haven’t spent any more money. Both FICO and VantageScore agree: keeping utilization under 30% is ideal.
- Boosting the Age of Credit Accounts: The longer your credit history, the healthier your score. An old card, even if dusty, shows lenders you can manage credit for years. FICO models give about 15% weight to the length of your credit history. VantageScore works similarly.
Even if you don’t use these cards every month, simply having them open adds stability and depth to your credit profile—think of them like mature trees in your credit forest.
How Canceling Unused Cards Can Hurt (or Sometimes Help) Your Credit
Closing an unused credit card often dents your credit score—sometimes by several points, sometimes just a little. Here’s what can go wrong:
- Increases Your Credit Utilization Ratio: Cancel a card with a big limit and suddenly a small balance on another card eats up more of your available credit, bumping utilization above 30%. The result is often a quick score drop.
- Shortens Average Account Age: If the canceled card is one of your oldest, your average account age goes down. That’s a red flag to lenders looking for experience.
But it’s not all bad. Closing newer cards or those with tiny limits doesn’t usually sting much. The effect is milder if you have several accounts in good standing, a solid payment history, and utilization stays low. Banks keep closed accounts on your history for up to 10 years, so your credit past doesn’t disappear overnight.
Financial and Practical Reasons for Canceling or Keeping Unused Credit Cards
The credit score isn’t the only thing to think about. Your budget and personal habits matter, too. Consider fees, security, and peace of mind.
When Canceling an Unused Card Makes Sense
Sometimes, a credit card just doesn’t earn its place in your wallet. Think about pulling the plug if:
- High Annual Fees: If you’re not using the perks, paying just to keep the card open drains your wallet. Many upscale cards charge $95 or more per year.
- Rarely Used or Unwanted Rewards: Not all points and miles are valuable. Some expire or never get used.
- Temptation to Overspend: If keeping the card around means you might rack up debt, it’s better out of sight (and out of wallet).
- Risk of Fraud: Fewer open accounts means fewer places for hackers to strike.
- Simplifying Finances: Managing fewer cards can make budgeting and tracking easier.
Tip: If the only problem is the annual fee, see if you can downgrade to a no-fee version instead. You’ll keep the credit age and limit, minus the cost.
When You Might Want to Keep Your Unused Credit Cards
Think twice before saying goodbye if your card brings these perks:
- Helps Your Credit Score: Old cards with big credit limits do wonders for both your credit history and utilization.
- No Annual Fee: If it costs nothing to keep, why cancel? It’s like free insurance for your credit profile.
- Active Benefits: Some cards offer extended warranties, travel insurance, or even cell phone protection, even if you don’t use them much.
- Planning a Major Loan: If you’ll soon apply for a mortgage or car loan, hold off on closing cards to keep your score as high as possible.
That old credit card may seem pointless, but it quietly boosts your financial options behind the scenes.
Best Practices for Managing Unused Credit Cards
If you’re stuck, don’t sweat it. Here’s how to make the smartest move for your money—and your credit:
- Use the Card Occasionally: Make a small purchase every couple of months, like a subscription or cup of coffee, and pay it off right away.
- Set Up Account Alerts: Get notified of any transactions. This helps catch fraud fast.
- Watch for Inactivity Closures: Issuers may close accounts if you never use them. Keep the account alive with a regular micro-transaction.
- Pay Off Any Balances First: Never close a card with an unpaid balance. That can hurt your score more than the closure itself.
- Redeem Rewards Before Closing: Use up any points, miles, or cash back. You’ll lose them if you cancel.
- Close with Care: If you do cancel, pay the balance, stop automatic payments, and destroy the card. Then check your credit report after a couple of months to be sure all is accurate.
Conclusion
There’s no one-size-fits-all answer when it comes to unused credit cards. Keeping old, no-fee cards can shore up your credit score and credit history, but sometimes it just makes sense to say goodbye—especially if fees or temptation become a concern. Weigh the effect on your financial goals and be sure to monitor your credit report after any change. Your future self (and your wallet) will thank you for making an informed choice.