Question
Is it a good idea to close unused Credit Cards?
Answer
Closing any credit card is not a decision to wander aimlessly into. There are several factors to consider and several things it will affect: closing a credit card will reduce the overall credit available to you; if you carry any balance at all on it, it will increase your overall credit utilization; and depending on the age of the card and number of cards you have total, it may affect your average length of credit history. Credit utilization and age of credit history are both factors in your credit report and thus have an impact on your credit score, so if you close any credit card account, be prepared for a drop in your credit score. If you close your oldest credit card, be prepared for a significant drop in your credit score.
With that said, if you have several cards of similar age AND the reduction in credit line won't significantly impact your credit utilization, closing a credit card may be the right decision for you.
Filed under: Credit Card
Roxxychic98
Nov 4
1:03 pm
I have great credit, but was given a grade of "F" when it came to the number of cards I have or had. I have had 10 credit cards, 5 remain open and 5 are closed. What do I need to do to improve this?
Reply Cancel ReplyCK Moderator
If you are happy with your score, do nothing. Some people obsess with perfect credit scores. If you are one of them, then moving more grades to A's will help. Keep in mind there is no benefit to a perfect score versus anything 750+
tplavery
Oct 25
6:51 am
There was a card company on campus giving away shirts to those who filled out applications. The reps explained the card company would just send offers by mail and then you decided to open or not. I never received the offer an forgot about the whole thing
I recently discovered that I had a credit card with them for almost two years before they closed it (due to inactivity im sure). Reports as open with no balance/no payments for the duration. Would it be beneficial to have this erased from my history since it was never used??
Reply Cancel ReplyCK Moderator
You can't really erase it since it was technically issued. The effect either way was probably negligible.
baird2100
Oct 8
3:31 pm
I was recently told from walmart card services that after 4 months of on time payments I can request a credit line increase. Should I do this every chance I get? Also, this card account was given to me in Jan. 2009 with a $400 credit line. Without warning it was reduced to $140. I paid usually in full every month. They honored my request for an increase. They increased it by $100 to $240. That is great. Usually I don't need credit because I don't believe in paying interest/finance charges. I have a Paypal business debit/ that can be used/ran as credit linked to my checking and thus earning 1% cash back. That's great too. It used to be even better when opened it because it earned over 5% at one point 2007-2008. Then I would transfer from my checking to Paypal and just use the Paypal card. Hope it gets back to them days.
Reply Cancel ReplyLitllam88
Sep 22
10:13 am
I have approximately 14 credit cards with very little to zero balance on them. A couple of them have such a low credit line that it's not even worth keeping open, esp. since it has an annual fee. It is one of my older accounts though. Should I keep it and pay the annual fees or close it?
Reply Cancel ReplyCK Moderator
If they have an annual fee, then you should generally close them. Of the ones you decide to close, cancel the newest ones first since the old ones help build your credit history. Wait 30 days between closures and check your score between closings to see the impact of each. Stop canceling cards if you think you credit score is going down too much.
CindyinAtl
Aug 30
8:13 am
I noticed that the score tracks the number of closed credit cards. How does this negatively affect my credit score? Can you get the closed cards removed? If so, will that negatively affect my score. I have a great score but 10 closed accounts. Several of them were closed by the creditor when the company went out of business.
Reply Cancel ReplyCK Moderator
Closed accounts don't lower your credit score. It is the shortening of your credit history that lowers your credit score. Generally, there is nothing you can do about lenders that go out of business but that is part of the reason to have a few different credit cards .
As for removing closed accounts from your credit report, it is not something that you can do unless the data is inaccurate.
Shine40
Aug 21
12:53 pm
This is a very interesting question to me, as I am pondering the same thing. I have a credit card with a very large credit line to a small store that I utilized to purchase a good vac. cleaner. It was a year of no interest, I paid it off and no reason to leave it open. So, should I close it and is there a "proper" way to close it so that it doesn't negatively impact my credit?
Reply Cancel ReplyCK Moderator
If you have many old cards and good credit. Closing this card shouldn't be a problem. If not, then consider keeping it open provided it has no annual fees.
forrest12
Aug 16
8:48 am
i have 4 chase accounts 2 are circuit city accounts since circuit city dosent exist should i close them?
Reply Cancel ReplyCK Moderator
Generally speaking, unless you are paying a fee or have too many credit cards, there is not a compelling reason to close old credit cards. In your case, I suspect Chase will close them at some point. Just try to keep some old cards help keep a long history.