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Having multiple unused credit cards sitting in your wallet or tucked away in a drawer can seem like unnecessary clutter. However, closing those unused accounts could negatively impact your credit. Here are some things to consider before canceling an unused credit card.
Potential Downsides of Closing Accounts
1. Reduced available credit
The total credit limit across all your accounts is factored into your credit utilization ratio, which makes up 30% of your credit score. Closing an unused card lowers your total available credit, so your utilization ratio will rise as a result. This could cause your credit score to drop.
2. Shorter credit history
The length of your credit history accounts for 15% of your FICO® Score. When you close your oldest card it shortens the average age of your credit accounts. This also tends to lower your credit score.
3. Loss of positive payment history
An unused card still builds your credit if it’s kept open and in good standing. Closing it removes those on-time payments from your credit report reducing your positive history.
When It Can Be OK to Close a Credit Card
Despite potential drawbacks. here are some situations where closing an unused credit card makes sense
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The card has an annual fee you can no longer justify paying. If cancelling would help your budget, the credit impacts may be worth it.
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It’s a newer account opened in the past few months. Eliminating a very young account would have a minor effect on your credit history’s length.
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You struggle with temptation to overspend. Removing access to more credit could help maintain healthy spending habits.
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There are no incentives to keep it open. If the account doesn’t offer rewards or other perks, there’s less reason to keep it.
Tips for Handling Unused Cards
Instead of closing unused credit cards, consider these alternatives:
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Use the card occasionally for small purchases you can quickly pay off. This will keep the account active.
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Set up a small recurring charge like a streaming subscription, and set up autopay from your bank to pay the bill every month.
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Contact the issuer to see if you can downgrade to a card with no annual fee. Then you can keep the account without paying to maintain it.
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If you won’t use the card, at least check account activity periodically for fraudulent charges. Report lost or stolen cards immediately.
The Bottom Line
It’s generally wise to keep old credit card accounts open, even if unused. But if the costs and risks of an unused card outweigh the credit-related benefits, cancellation may be the best option. Consider all factors carefully before closing any accounts.
When to cancel an unused credit card
Despite the potential benefits of keeping an unused credit card, sometimes it makes sense to close your account. You might be better off closing it if:
Things to do before deciding to cancel an unused credit card
If you’re still leaning toward closing your unused credit card, take a few more steps to ensure you’re making an informed decision.
Why you should CANCEL your old credit cards
FAQ
Does closing an unused credit card hurt your credit?
Closing older accounts can lead to a score drop, especially if you decide to close the card you’ve had the longest. Even though closed accounts remain on your credit report for up to 10 years, they no longer contribute to the ongoing aging of your credit history.
Is it better to close a credit card or let it go inactive?
Keeping an unused credit card open can benefit your credit score – as long as you follow good financial habits. If an unused credit card tempts you to unnecessarily spend or has an annual fee, you may be better off canceling the account.
Is it better to cancel unused store credit cards or keep them?
There’s really no benefit to closing the store cards, although there’s also no real harm to closing them, either. Personally I would leave them open unless there’s an annual fee; if you don’t use them for a year or more they may close on their own and that’s OK.
Is it better to cancel a credit card or keep a zero balance?
When you cancel a card you lose access to that card’s credit limit, so your overall credit limit goes down. Unless you carry a zero balance on all your credit cards, this change leads to a higher credit utilization ratio which can negatively impact your credit score.May 2, 2025