How to Decide Whether to Cancel or Keep an Unused Credit Card

Many of us have credit cards that we do not use frequently; they are frequently misplaced in wallets or hidden in drawers. But have you ever given it any thought as to whether it makes sense to preserve these unused cards or whether it is time to cancel them?

How to Decide Whether to Cancel or Keep an Unused Credit Card
How to Decide Whether to Cancel or Keep an Unused Credit Card

In this guide, we will examine how to decide whether to cancel or keep an unused credit card.

How to Decide Whether to Cancel or Keep an Unused Credit Card

Before diving into the decision-making process, let’s first clarify what exactly constitutes an unused credit card. An unused credit card has not been used for purchases or payments over an extended period, typically several months or more. It’s important to differentiate between unused and dormant cards, as dormant cards may still incur fees even if no transactions are made.

To Cancel or Keep an Unused Credit Card

Ultimately, the decision to cancel or keep an unused credit card depends on your circumstances and financial goals. Here are some final considerations:

1. Weigh the pros and cons:

Evaluate the benefits and drawbacks of keeping the unused credit card and consider how they align with your financial priorities.

2. Consider your long-term financial goals:

Determine whether canceling or keeping the credit card supports your broader financial objectives and plans.

3. Seek advice from financial professionals:

If you’re unsure about the best course of action, consider consulting with a financial advisor or credit counselor for personalized guidance.

4. Trust your instincts:

Ultimately, trust your instincts and make the decision that feels right for you and your financial situation.

Benefits of Keeping an Unused Credit Card

While it may seem counterintuitive to keep a credit card that you’re not using, there are several benefits to consider:

1. Building credit history:

Keeping an unused credit card can contribute to a longer credit history, which is a positive factor in determining your credit score.

2. Maintaining credit utilization ratio:

By keeping the credit card open, you’re effectively increasing your available credit limit, which can help keep your credit utilization ratio low.

3. Emergency backup funds:

In case of emergencies or unexpected expenses, having an available line of credit can provide peace of mind.

4. Retaining available credit limit:

Closing a credit card reduces your overall available credit, which can negatively impact your credit utilization ratio and, consequently, your credit score.

Drawbacks of Keeping an Unused Credit Card

Despite the potential benefits, there are also drawbacks to consider:

1. Annual fees:

Many credit cards come with annual fees, which can be an unnecessary expense if you’re not actively using the card.

2. The temptation to overspend:

Having access to additional credit may tempt you to spend beyond your means, leading to debt accumulation.

3. Increased risk of identity theft:

Unused credit cards may be more vulnerable to identity theft or fraud, as you may not be actively monitoring transactions.

4. Negative impact on credit score:

While keeping unused credit cards can benefit your credit score in some ways, it may also have negative consequences, such as lowering the average age of your accounts.

Assessing Your Financial Situation

Before deciding whether to cancel or keep an unused credit card, it’s essential to assess your current financial situation thoroughly. Consider the following factors:

1. Reviewing your current credit cards:

Take stock of all the credit cards you currently have open and assess their usage and benefits.

2. Analyzing your spending habits:

Evaluate your spending patterns and determine whether you have the discipline to use the card responsibly.

3. Evaluating your credit score and history:

Check your credit score and review your credit history to understand how closing the unused card may impact your overall credit profile.

4. Considering your overall financial goals:

Determine how closing or keeping the unused credit card aligns with your long-term financial goals and priorities.

Factors to Consider Before Cancelling an Unused Credit Card

If you’re leaning towards canceling an unused credit card, it’s crucial to consider the following factors:

1. Length of credit history:

Closing a credit card can shorten your average account age, which may negatively impact your credit score.

2. Credit utilization ratio:

Closing a credit card reduces your available credit, potentially increasing your credit utilization ratio.

3. Impact on credit score:

Understand how closing the unused credit card may affect your credit score and whether it’s worth the potential dip.

4. Available credit limit:

Consider whether closing the credit card will significantly impact your overall available credit and how it may affect your financial flexibility.

5. Rewards and benefits associated with the card:

Take into account any rewards or benefits you may lose by closing the card and whether they outweigh the costs.

Steps to Take Before Cancelling an Unused Credit Card

If you’ve decided that canceling the unused credit card is the right move for you, consider taking the following steps beforehand:

1. Paying off any outstanding balance:

Before closing the credit card, ensure that you’ve paid off any outstanding balance to avoid accruing additional interest or fees.

2. Redeeming any remaining rewards:

If the credit card has rewards points or cashback balances, make sure to redeem them before closing the account.

3. Contacting the card issuer:

Reach out to the card issuer to inquire about any retention offers or incentives they may offer to encourage you to keep the card open.

4. Understanding the impact on credit score:

Familiarize yourself with how closing the credit card may impact your credit score and prepare accordingly.

Alternatives to Cancelling an Unused Credit Card

If you’re hesitant to cancel the unused credit card outright, consider exploring alternatives:

1. Downgrading to a no-annual-fee card:

If the unused credit card carries an annual fee, inquire with the issuer about downgrading to a no-annual-fee version of the card.

1. Using the card for occasional purchases:

Instead of closing the card, consider using it for small, occasional purchases to keep it active and prevent it from being closed due to inactivity.

2. Setting up automatic payments:

Automate payments for small recurring expenses, such as subscriptions or utility bills, to keep the card active without the need for regular manual transactions.

3. Sharing the card with a trusted family member:

If you’re concerned about the card’s security or potential misuse, consider adding a trusted family member as an authorized user to share responsibility for the card’s usage.


Deciding whether to cancel or keep an unused credit card is not a decision to be taken lightly. It requires careful consideration of various factors, including your credit history, financial goals, and personal preferences. By weighing the pros and cons, exploring alternatives, and seeking guidance when needed, you can make an informed decision that aligns with your overall financial well-being.

Remember to regularly review and reassess your credit card usage to ensure it continues to serve your best interests.



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