Is It Better to Cancel Unused Credit Cards or Keep Them?

By Dan Miller. April 10, 2025 · 5 minute read

This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

Is It Better to Cancel Unused Credit Cards or Keep Them?

If you are thinking about closing a credit card you don’t use, know that while it may eliminate a fraud risk, doing so can negatively impact your credit. It can shorten your credit history and lower your credit limit, which in turn could increase your credit utilization ratio. Both of these factors can lower your score.

So before you cancel an unused credit card, make sure you understand how that can alter your credit score. That will allow you to make an informed decision that is best for your specific financial situation.

Key Points

•   Canceling unused credit cards can lower your credit score in two ways.

•   Closing a credit card lowers the average age of accounts, potentially affecting the credit score negatively.

•   Canceling a card increases the credit utilization ratio, which can negatively impact the credit score.

•   Keeping unused credit cards open can increase the risk of fraud due to lack of regular monitoring.

•   To minimize credit score impact when canceling a card, pay down balances, move credit, and consider the card’s age.

How Do Unused Credit Cards Affect Your Credit Score?

There are a few factors that make up your credit score. Two of the components of your credit score are your utilization ratio (how much of your available credit you’re using) and your average age of accounts. Closing an unused credit card can impact both of these.

Credit Utilization

Your credit card utilization is defined as the amount of your available credit that you are currently using. So if you have a card with a $10,000 limit and you have an average balance of $1,000, your utilization is 10% ($1,000 divided by $10,000). A low utilization is a positive indicator for your credit score. So closing any credit card account will lower the total amount of available credit you have. This will raise your utilization percentage and possibly lower your credit score.

Recommended: How to Read a Credit Report

Credit History Length

Another factor that makes up your credit score is the average age of your accounts. Having credit accounts that have been open for a long time is generally considered more positive for your credit score than having only recent accounts. So if you close an unused credit card, especially one that you’ve had open for a long time, it can lower your average age of accounts and possibly also hurt your credit score. The account may stay on your report for a while, but when it eventually drops off, your score could decrease.

Recommended: 10 Advantages of Credit Cards

Are There Risks to Keeping Unused Credit Cards?

So while it can make sense to keep your unused credit cards open, there are a few risks of keeping unused credit cards. If you no longer are monitoring your account, there is a higher risk that someone might commit credit card fraud with your account. So you’ll want to make sure that you are regularly looking at your accounts, and maybe even make an occasional purchase on each credit card that you have.

When Is It Better to Cancel a Credit Card?

There are also some situations where it’s better to just cancel a credit card. One reason to cancel a credit card is if it comes with an annual fee.

•   If you’re not using a credit card and not getting any value from its benefits, it usually won’t make sense to pay the annual fee, especially when there are so many credit cards that offer good rewards with no annual fee.

•   Another situation where it might make sense to cancel a credit card is if you’re having trouble controlling your spending. If having a credit card is causing you to go into debt or spend more than you earn, it might make sense to do a bit of a financial reset.

Using a debit card or moving to paying with cash might help you get to a better spot, financially speaking.

Recommended: 10 Advantages of Credit Cards

Can You Cancel a Credit Card Without Hurting Your Credit Score?

If you’re thinking about canceling a credit card without impacting your credit score, there are a few things that you can do to help mitigate the hit to your credit score.

•   One thing is to make sure to pay down any balance on the card before you close it.

•   Another possible option is to call your credit card company and see if you can move some of your available credit to another credit card. That might help keep your credit utilization ratio high.

The Takeaway

If you have a credit card that you no longer use, you might be tempted to just cancel the card so you don’t have to think about it anymore. However, there may be some reasons where it can make more sense to keep the card open, even if you never or rarely use it. Keeping it open may help build your credit score, and, if you close a card you’ve had for a long time, it can impact your credit score.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Do unused credit cards close automatically?

An unused credit card generally won’t be closed automatically, at least at first. However, most credit card companies do reserve the right to close your account for any reason, including if you don’t use your credit card. So if you want to keep a credit card account open, it may make sense to occasionally make a purchase or two.

Does canceling an unused credit card hurt your credit?

Canceling an unused credit card can lower the total amount of your available credit. This may raise your credit utilization ratio, which is one of the major factors that make up your credit score, and a higher number can ding your score. You may also shorten your credit history, which can negatively impact your score as well. Make sure that you understand any possible impacts to your credit score before you cancel an unused credit card.

Is it bad to have an unused credit card?

No, in most cases it is not bad to have an unused credit card. In some cases, it can even help to keep your credit card accounts open, even if you’re not actively using the card. This is because having an open account increases your available credit and it may raise your average age of accounts. Both of these are factors that go into calculating your credit score.


Photo credit: iStock/FreshSplash

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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