How long should you keep a credit card open?

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Maybe you’re new to credit and not sure how long you should hold onto a credit card after opening to a new one. Or maybe you have long since outgrown a card and aren’t sure whether removing it from your wallet is what’s needed.

There’s no one answer as to how long you should keep a card account. Rather, it depends on your overall credit and how much of an impact the drop in your score could have on your financial goals.

As such, it can be helpful to weigh the benefits and risks of closing your credit card, and consider alternatives to canceling your card, with tips for keeping your credit card account active — and credit score strong.

How long should you keep a credit card account?

You can keep a credit account open as long as you’d like without harm to your credit. Even if you’ve stopped using the card regularly, it could still make sense to keep the account open, depending on how extensive your credit history is and the amount of debt you currently owe.

That’s because closing a credit card account can affect your credit score in two key ways: by decreasing the average age of your credit history and by increasing your credit utilization ratio.

How closing a credit card affects your credit history

The longer your credit history, the stronger an influence it is on your credit score. The length of your credit history plays a part in how your credit score is calculated, accounting for about 15 percent of your FICO score.

If the card you’re thinking about canceling is among your oldest accounts, closing it will decrease the average age of your credit history, which can hurt your credit score.

How closing a credit card affects your credit utilization ratio

More important than age of credit is your credit utilization ratio, which makes up 30 percent of your FICO score. Credit utilization looks at how much you owe on revolving accounts — like credit cards — compared with your total credit limit across all of your open accounts. What this means is that if you close a card with a high credit limit, it could bring down your total limit significantly enough that your debt balance becomes more than the recommended 30 percent of your available credit.

When is it time to cancel an unused credit card?

Though you risk a ding to your credit score by closing credit card accounts, there are situations in which it’s a good idea to cancel your card.

You’re ready to move on from a starter card

When you’re new to credit, you’re often limited to starter credit cards designed to help you build a credit history with responsible spending and on-time payment. These cards can be the financial stepping stones to stronger, more rewarding credit cards — including cards offering cash back or points.

Starter cards don’t typically come with high credit limits, so after you’ve graduated to stronger credit, closing these accounts might be a good choice.

You’re paying more than you get back in rewards

Premium rewards cards can be lucrative, but they’re also pricey. It may be worth closing the card when the points or miles are no longer worth the high annual fee. Or consider downgrading to a different card, like a no-fee rewards card that offers flat-rate cash back, premium perks or customized rewards.

You want to streamline your finances

While multiple credit cards can make sense, keeping track of annual fees, rewards bonuses and rotating categories can become complicated. If you’re ready to simplify your wallet, or simply don’t want the temptation to spend, you may want to close accounts you’re not using to focus on one or two cards for everyday spending.

You’re no longer with a joint spouse or partner

If you’re going through a divorce or separation, you may need to cancel credit cards you shared with your partner to more cleanly separate your future finances. If your partner is an authorized user on your card, you should be able to call your card issuer to request removing them from your account.

Alternatives to canceling your credit card

If you’re no longer using a credit card, there are ways to preserve your history and credit lines without closing the account.

• Downgrade to a card with no annual fee. You might be able to save money on annual fees by switching your card to another with the same issuer. Many of today’s best cards are sibling credit cards that include a no-fee version. By converting your card to another with the same issuer, you can save money on fees — and often keep your original credit line untouched.
• Upgrade to a card that better fits your lifestyle. If your current card isn’t cutting it, you may want to trade it for one with stronger rewards that better fit your new spending habits. If you upgrade with the same issuer, you might get to keep the credit line of your original account. Just remember with upgrades (or downgrades) you won’t be eligible for a welcome offer or intro APR with the new card.
• Transfer your balance to a 0 percent intro card. If you’re worried about a high APR, consider transferring large balances to a new card offering no interest for a specified time. The best balance transfer cards offer a 0 percent APR for 12 months or longer, potentially saving you a bundle on interest.
• Use your card sparingly to keep your account open. An active credit card can help you balance your credit utilization ratio, maintain a broad credit mix and extend the age of your accounts — all of which support strong credit. Use it occasionally for little purchases, and set up autopay to cover any monthly statements.

The bottom line

The decision to keep or close a credit card account depends on your overall credit and how much impact the drop in score could have on your financial goals. If you’re not using a credit card regularly, consider alternatives such as downgrading to a card with no annual fee or upgrading to a card that better fits your lifestyle. Doing this can help maintain a strong credit score while avoiding the risk of closing your card.

Frequently asked questions

• How often should I use my card to keep it active?

  While it depends on the issuer, you should use your card at least once every few months to keep it active. Even a small purchase is enough to show your card company that you’re still interested in the card.
  

• How risky is it to close a credit card in the first year after opening my account?

  If you’ve had your card for less than a year, closing it reduces the length of your credit history and has the potential to increase your credit utilization ratio — both of which can negatively affect your credit score. It also may not make your issuer happy and could make it more difficult to get approved for their cards in the future. If you’re considering closing a card, think about alternatives instead, such as swapping it for another card offered by the same issuer.
  

• Will it hurt my credit score if I don't use my credit card?

  No, though if you don’t use your card frequently — ideally at least a few times a year — your credit card issuer can close or restrict your use of the card, which can affect your credit score.