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You might think it’s pretty easy to say goodbye to an old credit card sitting in your wallet. But closing it could do more harm than you think.
Or, on the flip side, holding onto it could help you more than you think.
Here are four good reasons to keep a credit card open for the long haul.
1. It helps your credit score
Keeping a credit card for years helps your credit score in a few different ways.
First, there’s “length of credit history,” which makes up 15% of your FICO® Score. Factors here include both your average account age and the age of your longest account. The longer you keep your cards open, the better off you’ll be on both fronts.
There’s also “amounts owed,” which makes up 30% of your FICO® Score. A big part of that is your credit utilization ratio: basically, that’s the amount of credit you’re actually using versus the amount you have in total. A lower ratio shows that you’re not maxing out credit lines and spending willy-nilly — a green flag for lenders.
If you close a card, it hurts both your length of credit history and your credit utilization ratio. For that reason, keeping it open could be a smart move.
2. It costs you nothing (if there’s no annual fee)
You probably don’t want to pay hundreds of dollars for something you aren’t using. If your card doesn’t charge an annual fee, though, there’s very little downside to keeping it.
You don’t have to use it often, either. One small purchase — say, a pack of gum — every few months will keep your card open. Just make sure you don’t forget to pay your balance, however small.
If you hold onto it, a no-annual-fee card can quietly boost your credit score for years.
Want to find a great card you can hang onto indefinitely? See our list of the best no-annual-fee cards available now.
3. It gives you more borrowing power
Life can change a lot in a decade. Your income, expenses, and goals probably look very different than they did when you opened the card.
Keeping an old card open gives you flexibility. It can serve as backup in an emergency, or help you cover a large purchase, all without applying for new credit.
Even if you barely ever use it, having that available line of credit can offer peace of mind.
4. It preserves rewards, and your relationship with the issuer
Once you close a card, you could be saying goodbye to the rewards you earned on it for good. If you use them beforehand, that’s not a problem. But if you want a way to use, say, Chase travel points, and just closed your last Chase card, you’re probably out of luck.
Some older cards also come with perks that are no longer offered to new applicants. Plus, if you’ve had a card with the same bank for many years, that history can matter.
Having a card open for years could:
- Improve odds of retention offers
- Make it easier to change products
- Help with a request for a higher credit limit
Banks value long-term business — and closing an old account can hurt that relationship.
When it might make sense to close
A card that made sense 10 years ago might not fit your current lifestyle. Maybe you travel more now, and want a card with better rewards. Or maybe your credit score’s improved and you qualify for better offers.
Still, even if your card charges a steep annual fee, closing it isn’t your only option.
Some issuers will let you downgrade to another, less expensive card — keeping your account history while saving on fees. That way, you can update your rewards strategy while still enjoying all the benefits of an old account. It’s always a good idea to see what your downgrade options are before closing a card outright.
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