Should I Cancel My Unused Credit Card?


If your wallet is stuffed or you've finally paid off that troublesome balance canceling a credit card can seem like the smart thing to do. But is it really the best idea for your credit?

While it's tempting to tie up loose ends, especially after paying off a stubborn balance, closing a credit card is not the best thing you can do for your credit score.

Credit Utilization

Credit utilization is a huge factor in your credit score (35 percent) and suddenly taking away a large amount of available credit will affect it negatively and cause your ratio to increase, dropping your score. The more available credit you have the better especially if the amount of debt you have isn't changing.


Additionally, the longer the open lines of credit on your report the better it looks to lenders. If you've had a card for 10 years closing it will erase that longevity. It is better to pay it off, cut it up and then just let it exist on your report to help boost utilization and credit history.

What If I Have An Annual Fee?

But if you have a card with an annual fee closing it may seem like the only way to avoid fees on a card you no longer use. You have two options that can work to keep the card open but get rid of the fee.

  1. Switch to another card with no annual fee. Credit companies offer a variety of cards and likely have one with no annual fees attached. You can move to that new card without having to abandon the existing account, balance and history.
  2. Contact your credit company and ask to waive the annual fee. If you are thinking of closing your account they may be more inclined to offer you incentives to stay with them.

If you don't have an annual fee your best move is to simply destroy the cards or leave them at a safe place at home so they don't get used. Make sure the cards are secure and you set account activity notifications just to be sure that no one else is using that card either.

We're here to help you rebuild and understand your credit. Give us a call to get started or learn more about what we can do for you 1-800-431-0449.