Many people assume that closing an old credit card is a smart financial move. However, this decision can sometimes harm your credit score rather than help it. Keeping your older credit cards open provides multiple benefits, including a stronger credit history, lower credit utilization, and better financial stability.
In this guide, you’ll learn:
✅ Why keeping old credit cards open benefits your credit score
✅ How closing a credit card can negatively impact your financial health
✅ What to do with an unused old credit card
✅ When it actually makes sense to close a credit card
Let’s break it down!
1️⃣ Why Keeping Old Credit Cards Open Helps Your Credit Score
Your credit score is determined by several key factors. Keeping older credit cards open plays a crucial role in improving three of these factors:
🔹 1. Extends Your Length of Credit History
📌 Why It Matters:
- The age of your credit accounts makes up 15% of your credit score.
- A longer credit history signals responsible borrowing behavior.
📌 Example:
- Imagine you opened Credit Card A in 2010 and Credit Card B in 2020.
- If you decide to close Credit Card A, your average credit age decreases, which may negatively impact your credit score.
✅ Solution: Keep your oldest credit cards open to maintain a lengthy credit history.
🔗 Learn More About How Credit Scores Work
🔹 2. Reduces Your Credit Utilization Ratio
📌 What is Credit Utilization?
- Credit utilization refers to the percentage of your total available credit that you’re using.
- Keeping older credit cards open increases your total credit limit, which helps keep your utilization ratio low.
📌 Example:
- Total Credit Limit: $10,000
- Current Balance: $2,000
- Credit Utilization: 20% (Which is ideal!)
🚀 However, if you close an old card with a $5,000 limit, your total available credit drops to $5,000. This causes your utilization to spike to 40%, which can significantly lower your credit score.
✅ Solution: Keep older credit cards open to maintain a low credit utilization ratio.
🔗 Best Credit Cards for Low Credit Utilization
🔹 3. Strengthens Your Credit Mix
📌 Why It Matters:
- 10% of your credit score is determined by your credit mix, which includes credit cards, auto loans, mortgages, and other credit types.
- If you close an old credit card, you might reduce your credit diversity, which could negatively affect your score.
✅ Solution: Keeping a mix of different open credit accounts helps demonstrate responsible credit management.
🔗 Best Credit Cards for a Strong Credit Mix
2️⃣ When Should You Consider Closing an Old Credit Card?
Although keeping older credit cards open is usually a good idea, there are a few instances where closing a card may be the better choice.
❌ 1. High Annual Fees Without Benefits
📌 Why It’s a Problem:
- Some older cards have high annual fees but don’t provide useful perks anymore.
✅ Solution: Instead of closing the card outright, ask your bank if you can downgrade to a no-annual-fee version.
🔗 Best No-Annual-Fee Credit Cards
❌ 2. High-Interest Rates That You Don’t Need
📌 Why It’s a Problem:
- Carrying a balance on a high-interest credit card can be costly.
✅ Solution:
- Consider transferring the balance to a 0% APR balance transfer card to avoid interest for a set period.
- If possible, pay off the balance before closing the card.
🔗 Best Balance Transfer Credit Cards
❌ 3. Fraud Risk from an Unused Card
📌 Why It’s a Problem:
- A credit card that’s rarely used can become an easy target for fraudsters.
✅ Solution:
- To keep the account active, set up a small recurring charge (such as a Netflix subscription) and pay it off automatically each month.
- Regularly monitor your statements for unauthorized transactions.
🔗 How to Protect Yourself from Credit Card Fraud
3️⃣ What to Do If You No Longer Use an Old Credit Card
Instead of closing an old credit card, consider these smarter alternatives:
✔ Use it for a small recurring bill (like a streaming service) to keep it active.
✔ Check for downgrade options if you want to avoid an annual fee.
✔ Store it safely in a secure location to prevent fraud.
✔ Monitor your statements even if you don’t use the card regularly.
🔗 Learn How to Manage Unused Credit Cards
4️⃣ Frequently Asked Questions (FAQs)
1️⃣ Will keeping an old credit card open hurt my credit score?
✔ No! In fact, keeping an old card open helps extend your credit history and lowers your credit utilization, both of which positively impact your score.
2️⃣ How long should I keep an old credit card open?
✔ Keep it as long as possible, unless it has high fees or fraud risks.
3️⃣ Does closing a credit card remove it from my credit report?
✔ No. A closed credit card remains on your credit report for up to 10 years.
4️⃣ Should I close a credit card before applying for a new one?
✔ No. Closing an old card before applying for a new one can hurt your credit utilization and lower your chances of approval.
🚀 Final Thoughts – Keep Your Old Credit Cards Open for Maximum Benefits
📌 Keeping older credit cards open is one of the easiest ways to maintain a strong credit score. By leaving them active, you protect your credit history, lower your credit utilization, and improve your overall financial health.
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