Should You Close Unused Credit Cards?

When you stop using a credit card, it can be tempting to close the account and move on. Maybe you’ve upgraded to a rewards card with better perks, paid off old debt, or simply want fewer accounts to manage. While closing an unused card may seem like a smart way to simplify your finances, it can sometimes hurt your credit score.

Before you cancel a credit card, it’s important to understand how keeping the account open can benefit your credit health.

How Unused Credit Cards Can Help Your Credit Score

Your credit score is influenced by several factors, and an open credit card account can positively affect many of them.

1. It Helps Lower Your Credit Utilization Ratio

Credit utilization measures how much of your available credit you’re using. It’s calculated by dividing your total credit card balances by your total credit limits.

For example:

• Card A limit: $5,000
• Card B limit: $5,000
• Total available credit: $10,000
• Total balance: $2,000

Your utilization ratio is 20%.

If you close Card B, your available credit drops to $5,000 while your balance remains $2,000. Your utilization ratio jumps to 40%, which could negatively impact your credit score.

Many experts recommend keeping utilization below 30%, and staying under 10% may be even better for maximizing your score.

Get more tips on the fastest ways to improve utilization.

2. It Supports a Longer Credit History

The length of your credit history plays a role in your credit score. Older accounts help demonstrate a long track record of managing credit responsibly.

While closed accounts may remain on your credit report for years, keeping older accounts open can continue strengthening your overall credit profile over time.

3. It Contributes to Your Credit Mix

Lenders like to see that you can manage different types of credit responsibly. Credit cards are a key part of your credit mix, alongside loans such as mortgages, auto loans, and student loans.

Closing a credit card may reduce the diversity of your credit profile, especially if you have only a few open accounts.

4. It Gives You More Opportunities to Build Positive Payment History

Payment history is the single most important factor in most credit scoring models.

Even if you rarely use a card, making an occasional small purchase and paying the balance in full can add another positive payment to your credit report. Over time, those on-time payments help reinforce responsible credit management.

When Closing a Credit Card Might Make Sense

Although keeping a card open is often beneficial, there are situations where closing an account could be the right decision.

Consider closing a card if:

• The annual fee outweighs the benefits you receive.
• The account encourages overspending or creates financial stress.
• The card has unfavorable terms that no longer meet your needs.
• You are simplifying your finances, and the impact on your credit score would be minimal.

If an annual fee is your main concern, ask the issuer whether you can downgrade to a no-annual-fee version of the card. This allows you to keep the account open while avoiding the recurring cost.

How to Keep Credit Cards Active

Credit card issuers may eventually close inactive accounts, so it’s a good idea to use unused cards occasionally.

Try these simple strategies:

• Put a small recurring bill on the card, such as a streaming subscription.
• Use the card for a small purchase every few months.
• Set up automatic payments to ensure balances are paid on time.
• Monitor the account regularly for fraud or unauthorized charges.

These small actions can help keep the account active while supporting your credit profile.

Action Steps Before You Close an Unused Card

Before canceling any credit card, ask yourself:

• Will closing it increase my credit utilization ratio?
• Is it one of my oldest accounts?
• Does it have an annual fee, and can I switch to a no-fee version?
• Could I keep it active with occasional small purchases?
• Will closing it meaningfully simplify my finances?

If the answer to most of these questions is “no,” keeping the account open may be the better choice.

Do one thing. Before closing an unused credit card, calculate how it would affect your credit utilization and overall credit profile. If the card doesn’t cost you money to keep, consider leaving it open and using it occasionally to help maintain a healthy credit score.