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Should you close credit cards you don’t use?

If you’ve got a credit card or two sitting around that you don’t use, you might be wondering whether you should close your unused cards. Here’s how to decide.

Good reasons to close a card

It’s likely that reason you’re considering closing a card is a very good reason to say goodbye to a card you’re not using. Whether you’re trying to avoid an annual fee or simply decluttering, there are plenty of good reasons to close a card. Here are a few.

The card has an annual fee

If you’re not getting value from a card well in excess of its annual fee, you should consider closing the card.

I’m not opposed to having a card with an annual fee. In fact, I carry several cards with annual fees. But every year, I reevaluate each card in my wallet to make sure that I’m getting value in excess of the annual fee.

If you’re paying an annual fee on a card that you don’t use, chances are that you’re not getting significant value from that card. You should probably close that you’re not using if it has an annual fee.

Reducing risk and management overhead

You incur some amount of risk for every credit card you have. While credit cards offer excellent protection against fraud, credit cards do go missing. Data breaches happen and sometimes you can find unexpected fraudulent charges even on a card you haven’t used in months. And even an unused credit card can cause some measure of mental clutter that you can do away with if you close the card.

Even if your card isn’t stolen, you still incur some amount of management overhead for every card you have. Whether that overhead is checking statements monthly, downloading transactions into an app, or simply carrying the card in your wallet, there is always a cost to having a credit card open. Closing a card that you don’t use means you’re no longer spending any time managing the card, saving you a small amount of time and mental energy

Good reasons to keep a card open

Before you close out every card that you use only occasionally, consider that there can also be good reasons to keep a card open. Here are a handful of good reasons to keep an otherwise unused card open.

An unused card can help your credit score

Keeping an unused card open can help keep your credit score high.

By far, the biggest factor that will make or break your credit score is your history of on-time payments. But a large part of your score is determined by how much credit you have available, how much of your credit you are using, and the length of your account history.

Keeping an account open helps all of these factors. An account that is open will report your credit line to the three credit bureaus every month. If you close your account, your available credit will decrease, possibly lowering your score. An unused credit card is a line that shows a 0% credit utilization on your report month after month. All things equal, having credit lines reporting low utilization is better for your credit score. And every month a card is open, the account age grows, increasing your report’s average account age.

You card might have targeted offers you’re not using

Maybe you’ve stopped using a card because you’re earning more rewards on another card. Or perhaps you have better benefits on your other cards. There still may be a reason to keep a card around. Card-linked offer programs like Citi Merchant Offers, BankAmeriDeals, and Amex Offers can offer incredible savings on purchases at select merchants. If you’re considering closing a card, see if you can get some value from these programs.

If you go to concerts or events, an otherwise unused card might get you ticket access before tickets go on sale to the public. Capital One cardmembers got first shot at Taylor Swift tickets. Citi and Amex frequently have cardmember-only presales to popular concerts.

Bottom line

Ultimately, the decision to keep or close a card is up to you. It can be a good idea to keep a card with no annual fee open to help improve your credit score. If you have a few credit cards open, your score isn’t likely to suffer from closing a card. But it a card has an annual fee, or if you feel like you have too many cards open, feel free to close it.