What To Do With Old or Unused Credit Cards

How many credit cards are you using?

How many old and unused credit cards do you have laying around?

What are you doing with your unused credit cards? Are you keeping them? Have you closed them? Should you close them? Surprisingly, the answer isn’t a straightforward yes or no; it all depends on your individual situation.

For example, you may have one or more credit cards that you’re no longer using. This is typically the case when you sign up for a department store or a major retail chain. You sign up for the percentage off of your total purchase and then, after paying the amount due, never use the card ever again. Should you close it?

Closing old and unused credit cards without balances (meaning, you don’t owe any money on those cards) increases your credit utilization ratio. Credit utilization is the ratio of your credit card balances to credit limits as listed on your credit report; the higher the ratio is, the more it can negatively affect your FICO credit score.

Here’s an example: if your balance is $300 and your credit limit is $1,000, then your credit utilization is 30 percent. To find out your credit utilization simply divide your credit card balance by your credit limit then multiply by 100. The lower your credit utilization, the better. That shows you’re only using a small amount of the credit that’s been loaned to you.

So, if you close an old or unused card, you’re basically getting rid of some your available credit, which increases your credit utilization ratio. Another factor that impacts your credit utilization ratio is the size of the credit limits on your old and unused cards. The more unused credit you have available, the higher your score can be.

Keeping old or unused accounts open can help your credit scores. With that in mind, if one of your unused cards has a high annual fee and you know you won’t be making any large, credit-dependent purchases in the near future, you might want to close out that card. Always remember that doing so may affect your credit utilization rate, which in turn could hurt your score. Also, closed accounts are eliminated from your credit report after they have been closed for ten (10) years. At that time, the account closure could negatively impact your score if your other accounts are much newer.

This leads to another component of your credit score, the length of your credit history. In general, longer credit histories are better. Closing old credit cards, especially your oldest card, makes your credit history seem shorter than it really is. People with the highest credit scores, or scores above 760 — on a scale of 300 to 850 — are typically using less than ten percent of their available credit at any given time.

The Takeaway

If you have old or unused credit cards, and you keep those cards open, make sure that those cards are safe-guarded and that information is protected. You don’t want to have your credit limit and your credit history compromised. AmOne is your trusted source for all things money. For your active and your inactive cards, we can help you connect with credit monitoring services, help you obtain your credit report, for free, and answer questions about your credit scores. Find out how to reach us and learn how AmOne can help you today.



  1. Rob S. says

    Most people think if they make all their credit card payments on time, they should have great credit. This information helps clarify the the affect of credit utilization.

  2. says

    I would have to say, another great article from AmOne. One more thing to point out, too many open accounts can also hurt you. Your credit score is just a score and does not mean you will be approved for future credit. A lender looks at many things when deciding whether or not to approve you. Keeping credit cards open and active is a good idea to maintain a lower credit utilization as mentioned in this article, but too much credit can make you look high risk. If a potential creditor notices that you have a large amount of open credit, they may be less inclined to approve you for more, because there is no guarantee you will charge up your existing credit card later on. As a good rule of thumb, you want to have 3 or 4 major credit cards open, the older the card and the higher the limit the better. It is also better to have a mix of cards like a Visa, Amex and Discover card. Department store cards are okay, but too many is not good. If you really want to supercharge your credit score, consider an unsecured loan instead of a credit card. Having an auto loan and mortgage on your credit report is good too. Your pay history is an important part of your score, so use your cards on a regular basis. A good idea is to use one card each month, but only charge an amount you can pay off at the end of the month, to avoid the interest charge. As you make payments to your different cards each month, you will be showing that you are a responsible person that makes their payments on time. This will pay off later should you ever need to apply for more credit.