Credit cards often do not age well. The oldest ones generally have the fewest perks and benefits. As a result, you stop using them.

Here’s what you should do with an unused credit card

Well, you know that if you use your credit card up to the maximum limit, your credit score shall suffer. But it is a problem to have a credit card that is not being used? If you leave your credit card untouched for a long time, you run the risk of your card issuing company cancelling it. So, is it a better idea to close your credit card? How can closing a credit card affect your credit score? What other alternatives do you have? Continue reading to find out.

unused credit cards

unused credit cards

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Does an unused credit card affect your credit score?

Several factors affect credit scores. The two biggest influences are your payment history and how much of your credit limit you use. First, let us consider the scenario that you only have one credit card. Your best bet is to use it sparingly and pay it off on time, every time. Faithfully paying that bill helps build up a good payment history. Using a small amount of the limit helps your credit utilization, the second-biggest factor in your credit score. Credit experts recommend using less than 30% of your credit limit, and it’s even better to stay under 10%. On the other hand, If you have a lot of credit cards, using any one of them becomes much less important. A number of people let several cards sit dormant as they use other cards to collect reward points. They could conceivably cancel those unused cards to save on the annual fees, if any.

 

What effect does closing a credit card have on your credit score?

Closing a credit card account, whether it is unused or active, can hurt your credit score primarily because it reduces the amount of available credit you have. If the card that you close has a small credit limit, you might as well see little or no effect. But if it has a large limit, closing that card could have a huge impact on your score because you will be lowering your total credit limit. Credit utilization is calculated both overall and per card, so removing a big limit from your total can send your utilization up and your score down. A secondary way that closing a card can affect score is by lowering your average age of credit accounts. But that is a relatively minor factor. You do not need to worry about payment history, though. A closed card can remain on your credit report for years, letting your score benefit from a positive payment record.

 

What are the alternatives to closing a credit card?


If you do not use a credit card but are reluctant to close it because of the possible impact on your credit score, you still have other choices, such as the following:

  • Call the issuer and ask to change to a card from the same issuer that is a better fit. You can ask to be downgraded to a card without a fee, for example.
  • Keep the card open and put a small recurring charge on it to keep the issuer from closing it due to inactivity. You can consider using autopay or calendar reminders so that you do not miss a payment and hurt your score.
  • Apply for a card that you like, and make sure that the addition of its credit limit is high enough to replace the one on the card you do not use anymore. Then, close the unused credit card.

 

Are there any credit cards that are not worth keeping?

Some credit card accounts are not worth keeping. Cards that you can and should close are:

  • Secured credit cards that are geared toward building or rebuilding credit. If you have already done that, and you do not use the card, it may make sense to cancel it and get your deposit back or ask to transition to an unsecured card. 
  • Low-credit-limit cards you do not use anymore.
  • Store cards from retailers you do not patronize any longer. Those cards tend to have relatively low limits, so even modest use can lead to high utilization.
  • Cards with fees you do not believe are worth it, assuming the issuer does not offer a card that is more appealing to you.