What's Happening
14 minutes ago

1 Must-See Quote for AI Stock Investors From Arm Holdings' CEO

foolfool.com
21 minutes ago

Could Dogecoin Make You a Millionaire in 2025?

foolfool.com
22 minutes ago

This Stock Could More Than Double By 2029, According to Billionaire Bill Ackman

foolfool.com
24 minutes ago

Intel Just Pulled Ahead in This Key Market

foolfool.com
29 minutes ago

Did China's DeepSeek Just Crash and Burn President Trump's $500 Billion AI Stargate Project?

foolfool.com
31 minutes ago

US Stocks Set For A Cautious Start Ahead Of Inflation Data: Expert Says 'Strong Bull Markets Tend To Roar Back To Life After Corrections'

benzingabenzinga.com
34 minutes ago

Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term

foolfool.com
39 minutes ago

2 Stocks Down 47% and 82% to Buy Right Now

foolfool.com
41 minutes ago

What's a Fair Price to Buy Johnson & Johnson Stock?

foolfool.com
44 minutes ago

Is Archer Aviation Stock Worth the Hype?

foolfool.com
44 minutes ago

Is Berkshire Hathaway Stock a Buy Now?

foolfool.com
48 minutes ago

'Racism Has No Place in Missouri': State Attorney General Sues Starbucks Over Hiring Policies

benzingabenzinga.com
50 minutes ago

Geopolitics And Resource Nationalism Are Choking The Commodity Supply

benzingabenzinga.com
50 minutes ago

Should You Buy Affirm While It's Below $85?

foolfool.com
59 minutes ago

Should You Buy Bank of America While It's Below $50?

foolfool.com
60 minutes ago

'Investors Seem To Remain Poised For A Good Year In The Markets' Even As Valuation Remains Elevated, Says Fidelity's Macro Chief

benzingabenzinga.com
1 hour ago

Have $100,000? Here Are 4 Ways to Grow That Money Into $1 Million for Retirement Savings

foolfool.com
1 hour ago

Have $100,000? Here Are 4 Ways to Grow That Money Into $1 Million for Retirement Savings

retireretire.ly
1 hour ago

SMCI Stock Jumps Nearly 7% In Wednesday Pre-Market After Company Says It Will Meet SEC Filing Deadline

benzingabenzinga.com
1 hour ago

TRADEPULSE POWER INFLOW ALERT: BROADCOM (AVGO), RISES 2.1% AFTER ALERT FROM TRADEPULSE

benzingabenzinga.com

I’ve Never Canceled a Credit Card. Here’s Why

A small wallet showing it holding three credit cards

Image source: Upsplash/The Motley Fool

I’ve been using credit cards for a long time, and my go-to credit cards have changed quite a bit over the years. But there’s one common consumer behavior that many people are surprised that I’ve never done, and that’s canceling a credit card and closing my account.

There are a few reasons why I haven’t closed any of my cards. For one thing, I only have a few with annual fees, and I don’t see any real reason to cancel no annual fee cards. And as I’ll discuss here, canceling a credit card can have an adverse impact on your FICO® Score, and I’ve generally made a point to avoid any negative credit behavior.

Just to clarify

When I say I’ve never closed a credit card account, I’m not talking about cards I’ve canceled due to fraud. I’ve had my credit card information stolen and I’ve lost a card and had to cancel it and get a new one.

It’s true that I’ve never picked up the phone and closed a credit card account entirely. However, that doesn’t mean that I’ve never had an account closed due to inactivity.

In many cases, banks monitor account activity and decide to cancel unused credit card accounts. In my adult lifetime, I’ve had about a half-dozen credit cards closed simply because I didn’t use them often enough to make the bank happy.

Sometimes you’ll get a notice that says something to the effect of “unless you use your credit card within 30 days of this letter, your account will be canceled for inactivity.” But in other cases, the bank will simply close your credit card account and let you know afterwards. This is more common with no annual fee credit cards — after all, many banks are happy to let you continue to pay a fee for a card you aren’t using.

Canceling a credit card can hurt your score — in a few ways

It might seem counterintuitive, but getting rid of a credit card — especially one that you don’t use regularly — can cause your credit score to drop. To be clear, it isn’t likely to trigger a major plunge, but it can certainly make a difference.

The short explanation is that canceling a credit card affects several areas of the FICO credit scoring formula.

First, and most importantly, 30% of your FICO® Score is based on the “amounts you owe.” This includes your credit card balances relative to your total credit limit, a concept known as your credit utilization ratio.

Here’s why it matters. Let’s say that you have one credit card with a $1,000 balance and a $4,000 limit, and another credit card with no balance and a $1,000 limit. Currently, you’re using 20% of your available credit ($1,000 out of $5,000 in total limits). But if you were to cancel the smaller, unused credit line, your credit utilization would immediately jump to 25%.

If you’re looking to establish a new credit card relationship, check out our list of the top credit cards right now.

In addition, 15% of your credit score comes from the length of your credit history. This category considers several time-related factors, including the average age of your open accounts and the ages of your individual credit accounts. Closing a credit card (especially one you’ve had for a while) can hurt you here. In a nutshell, the FICO formula rewards you for letting your accounts age.

Should you cancel your old credit cards?

Of course, like any personal finance decision, what works for one person doesn’t necessarily work for someone else. There are certainly some good reasons to cancel credit cards.

For example, if you have a travel credit card with an annual fee, and you don’t feel like you’re getting enough value from it, it can be smart to cancel. In situations like this, it can also make sense to downgrade to a lower-fee card from the same issuer so you won’t have a closed account on your credit report.

It can also make sense to cancel a credit card if you find you have too many cards open to effectively keep track of, or if the account terms or benefits change in a way that makes the card undesirable to you.

But the key takeaway is that there are drawbacks of canceling a credit card, so keep those in mind before you do.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

Related Posts

So you have $100,000 and you want to build it into $1 million by retirement. That’s great! Even if you have less — perhaps a

Okay, folks. It’s time to get serious about Social Security. I don’t like to be the person who sounds alarms and causes unnecessary panic. But

Image source: Getty Images The best credit cards have a lot of perks — cash back, travel rewards, purchase protection, and more. But what happens

Social Security benefits for spouses are a common source of confusion. MassMutual reports that 25% of surveyed adults near retirement age were unaware that spouses