Is It Better to Cancel Unused Credit Cards or Keep Them


Do I cancel or keep unused credit cards? This can be tricky to decide. It depends on many factors, such as the effect on credit score. Closing a card can reduce the credit utilization ratio, and harm your score. Or, keeping many cards can cause overspending and debt.

Weigh up the individual cards. Look at annual fees, interest rates, rewards, and value. If high fees and few benefits, it may be best to cancel. Whereas, if low fees and great rewards, keep it.

Also, cancelling a card could reduce the length of your credit history. This impacts your score too. So, think twice about cancelling the oldest card.

Let’s look at John’s story. He closed cards, believing they harmed his financial stability. But, this increased his credit utilization ratios, and decreased average account age. It took him years to recover his credit score.

Explanation of the importance and impact of unused credit cards

Unused credit cards can be both beneficial and detrimental to one’s financial life. On one hand, a higher credit limit can be obtained by keeping unused cards, which may result in a better credit utilization ratio and credit score. This is especially helpful for those looking to get a loan or mortgage. However, there are risks too. An annual fee may be an unwanted expense and having too many cards increases the risk of identity theft or fraud.

It is also important to consider the consequences of cancelling unused credit cards. This can lower the available credit and raise the credit utilization ratio, leading to a reduction in credit score. But, if one has had trouble controlling expenditure in the past, closing the accounts could be a smart move to stop temptation and reduce debt.

Moreover, tracking multiple cards can be complex and time-consuming. It can make it hard to keep an eye out for suspicious activity or unauthorized charges.

Experian® states that keeping dormant cards does not damage credit scores.

Advantages of canceling unused credit cards

Canceling unused credit cards has many benefits! It:

  • Reduces the risk of identity theft
  • Saves on annual fees
  • Helps manage credit better
  • Stops people from accumulating debt they don’t need

For example, John canceled his two inactive cards. He saved $200 in yearly fees and lowered his debt-to-income ratio by 20%. This enabled him to get a mortgage with better terms – helping him to achieve his goal of homeownership.

Is It Better to Cancel Unused Credit Cards or Keep Them

Disadvantages of canceling unused credit cards

Canceling unused credit cards can have some drawbacks to consider before deciding.

  1. It can lower your credit score; reducing the average age of your accounts. That means it may be harder to get a loan with good terms.
  2. It could raise your credit utilization ratio, which is the amount of credit you are using compared to the total amount available. A higher ratio can also lower your credit score.
  3. You will miss out on rewards or benefits associated with the card, like cash back, airline miles, etc.
  4. It could limit your financial flexibility in an emergency, making it harder to access funds quickly.

It is important to think about these drawbacks and evaluate your personal financial circumstances before deciding to cancel unused credit cards. Examples of people having a negative effect on their credit score after canceling demonstrate the risks and importance of this.

Related Article – Is It Bad To Close Your Credit Card  

Considerations before canceling unused credit cards

Weighing up whether to axe unused credit cards is a major decision, as it can have either a good or bad result for your funds. There are a few key points to bear in mind before settling on this.

  1. Think of the bearing on your credit utilization ratio. This proportion is the percentage of open credit you are now using. Annulling inactive cards could potentially reduce this proportion, which can upgrade your credit score. Nevertheless, if you own a mass of debts on other cards, ending unused ones might increase your overall utilization and harm your credit.
  2. Pay attention to the age of the accounts. The length of your credit record plays a huge role in deciding your creditworthiness. If you abolish an old card, it can reduce the average age of your accounts and possibly damage your credit score. On the other hand, if you decide to keep dormant accounts open, be aware that certain issuers may choose to shut them due to long inactivity.
  3. Moreover, reflect on any possible dues connected with keeping dormant cards active. Some companies ask for yearly fees for looking after their cards, whether they are being used or not. If you no longer find value in these cards and they come with high fees, it could be more financially wise to cancel them.

To make a well-thought-out decision regarding canceling unused cards:

  1. Assess your total debt situation and prioritize paying off sums on active cards before looking at closing others.
  2. Consider how canceling or keeping these accounts will affect your credit utilization ratio.
  3. Weigh any potential annual fees linked with keeping inactive cards open against their advantages.

By cautiously judging these considerations, you can decide whether it is better for you to do away with unused credit cards or keep them open. Note that every person’s circumstances differ, so what works for one person may not work for another. Take into account these factors and settle on a choice that fits in with your financial goals and needs.


Credit cards can be a useful tool. But should you cancel unused ones or keep them? It depends on your circumstances and goals.

Keeping unused cards can bring advantages.

  1. It boosts your credit utilization ratio, an important factor in your credit score. By keeping them open, your ratio stays low, and you could improve your creditworthiness.

Also, closing old cards could shorten your credit report history. This is generally seen as bad by lenders, and it could hurt your creditworthiness.

So, there are factors to consider for canceling unused cards. One is the fees. If you pay fees for cards you rarely or never use, it may be better to close them and save the money.

Another is the risk of overspending. Having numerous cards open might mean you’re more likely to spend too much and get into debt.

Frequently Asked Questions

FAQ: Is It Better to Cancel Unused Credit Cards or Keep Them

Q: Should I cancel my unused credit cards?

A: It depends on your financial goals and circumstances. Although canceling unused credit cards can simplify your finances and reduce the risk of fraud, it may also negatively affect your credit score.

Q: How does canceling a credit card impact my credit score?

A: Canceling a credit card can potentially lower your credit score. This is because it reduces your available credit and can increase your credit utilization ratio, both of which can impact your creditworthiness.

Q: Are there any benefits to keeping unused credit cards?

A: Yes, keeping unused credit cards can have some advantages. It can contribute to a higher available credit limit, lower your credit utilization ratio, and demonstrate a longer credit history, all of which can positively impact your credit score.

Q: How can I decide whether to cancel or keep my unused credit cards?

A: Consider factors such as the card’s annual fees, interest rates, and rewards. If a card has high fees or doesn’t offer any benefits that align with your needs, canceling it might be a good choice. However, if it has no fees and contributes positively to your credit score, keeping it might be beneficial.

Q: Will canceling a credit card affect my credit history?

A: Canceling a credit card does not remove it from your credit history. The closed account will still appear on your credit report, but the positive payment history associated with it will continue to benefit your credit score for some time.

Q: Can closing multiple credit cards at the same time have a significant impact?

A: Closing multiple credit cards simultaneously can potentially have a more substantial impact on your credit score. It can reduce your total available credit and increase your credit utilization rate, which might negatively affect your creditworthiness. It’s generally advisable to space out the closure of multiple credit cards over time.


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