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When and Why You Should Keep Your Credit Card
December 12, 2024
Conventional wisdom in credit management often says: “Don’t close your credit cards, especially your oldest one.” But is that always true? If you have cards you’re not using much, you might wonder if you should close them or keep them open. The answer for most people: Keeping your credit card open is usually beneficial – for your credit score and for potential financial flexibility.
This article will explore when and why you should keep your credit card open rather than canceling it. We’ll go through the advantages of keeping accounts open, situations where holding onto a card is especially important, and a few exceptions where closing might be okay. If you’re on the fence about closing a card, read this first to understand the full picture.
Benefits of Keeping a Credit Card Open
Keeping a credit card account open (even if you don’t use it often) can provide several advantages:
It helps your credit score.
One of the biggest reasons to keep cards open is to maintain a healthy credit score. Open credit cards contribute to two key credit factors:
- Credit utilization: This is the percentage of your available credit in use. More open credit available (with no or low balances) means a lower utilization ratio, which is good for your score. By keeping a card open, you retain its credit limit as part of your overall available credit, helping keep your utilization low.
- Length of credit history: The longer an account is open and in good standing, the more it can boost your credit history length. Keeping a long-standing card open is beneficial because it continues to age. Lenders and scoring models like to see that you have longstanding credit relationships. Even if you’re not actively using a particular card, its mere presence (especially if it’s an older account) supports a better credit profile.
In short, closing a card might ding your score, whereas keeping it open avoids that. As one example, if you’ve stopped using a card but keep it open, you avoid the instant loss of available credit that would come with closing – which could otherwise hurt the 30% of your FICO score that’s based on amounts owed (utilization).
It preserves your credit history and relationship with the issuer.
If you’ve had a card for many years, it’s part of your credit story. By keeping it open, you ensure that positive history remains on your report for the foreseeable future. Additionally, maintaining the account means you still have a relationship with that bank. That can be useful if you ever want another product from them; banks often extend better offers or approval odds to existing customers in good standing.
Also, consider your oldest credit card – many experts advise never to close your first credit card account if it has no fee, because it anchors your credit history length. Keeping that open indefinitely (even with minimal use) can be a smart move.
It costs you nothing (in many cases).
If the card has no annual fee, there’s usually no direct cost to keeping it open. You can stash it in a drawer if you’re not using it heavily. Unlike a card with an annual fee that you’d be paying for, a no-fee card doesn’t hurt to hang onto. It can quietly benefit your credit score in the background with no expense. Even cards with annual fees might be worth keeping open if the benefits outweigh the fee, but if they don’t, you can often downgrade to a no-fee version (thus eliminating cost while keeping the account open).
You maintain access to emergency credit and perks.
An open credit card is like a safety line – even if you don’t need it now, it’s there if an emergency expense arises and you need extra credit. Closing it would remove that available credit. Additionally, many credit cards come with certain perks that don’t require frequent use: for example, purchase protection, extended warranty, or emergency travel insurance. If you keep the card open and use it occasionally, you can still take advantage of those benefits when needed. Keeping multiple cards open also means you have backup options if one card is lost or not accepted somewhere.
More cards can mean more rewards opportunities.
If you are a responsible user, having several cards open allows you to strategize your spending. Different cards have different reward categories and bonus structures. By keeping cards open, you can leverage each card for what it’s best at (e.g., one card for groceries, one for travel, one for gas). If you closed all but one card, you’d limit your ability to maximize rewards. Of course, only do this if you can manage it responsibly – but if you can, keeping cards open can literally pay off in more rewards earned.
Avoiding negative signals to lenders.
Sometimes closing accounts can signal instability to lenders (this is a minor factor, but worth noting). If a lender sees you have recently closed several accounts, they might wonder why. Generally having open, active accounts in good standing, with some usage, shows lenders that you can handle credit responsibly. It’s a subtle psychological/relationship benefit: you appear as a stable, long-term customer.
When You Should Definitely Keep a Card Open
There are certain situations where you absolutely should keep your credit card open (at least for now):
- If it’s your oldest credit card: As mentioned, the oldest account holds weight. For example, if you got a credit card 10 years ago and it’s your longest-tenured account, keep it open (especially if no fee). Even if you don’t use it much, maybe swipe it once every few months for a small purchase to keep it active. This card anchors your credit age.
- If it has no annual fee: There’s little downside to keeping open a no-annual-fee card. You’re not paying for it, and it can sit there contributing positive credit factors. Many people keep their oldest no-fee card open indefinitely as a credit-building tool.
- If closing it would significantly hurt your credit utilization: Say you have a couple of cards with large credit limits and you carry small balances. Those big limits make your credit utilization low. If you close one, your utilization % will jump. For instance, you have two cards each with a $5,000 limit (total $10k limit) and you carry a $2k balance on one card = 20% utilization. Close the other $5k card and now it’s $2k out of $5k = 40% utilization – a much higher ratio, likely to ding your score. If a card’s credit line is helping keep your utilization in check, you should keep that card open.
- If it’s a card that offers ongoing benefits you still value: Maybe the card gives you a free checked bag on an airline, or extra warranty on electronics, or it’s your only card with a good cashback on certain categories. Even if you use it rarely, consider keeping it for those occasional perks. For example, a card might have a birthday reward or no foreign transaction fees – perks that aren’t daily use but are nice to have in specific situations.
- If you plan to borrow in the near future: If you’ll be applying for a major loan (mortgage, car loan, etc.) or even another credit card soon, it’s usually best not to close any accounts right before. Keeping everything stable (cards open, credit score as high as possible) is wise until that new credit is secured. Closing a card could lower your score or at least change your credit profile, which you want to avoid when lenders are about to evaluate you.
- If you have a limited credit history or few accounts: Those newer to credit or with only a couple accounts should be very cautious about closing any. You need all the positive credit history you can get. Keeping cards open (even with minimal use) helps build that length and depth. For someone with maybe two credit cards total, closing one wipes out half their revolving credit history – not ideal. In such cases, unless there’s a strong reason to close, keep it.
Are There Times When You Shouldn’t Keep a Card Open?
While keeping cards open is generally beneficial, there are a couple of exceptions or special cases:
If the card has an expensive annual fee and you’re not getting value:
In this case, you might not want to keep it open in its current form. However, even then, the advice isn’t necessarily to cancel outright – often you can downgrade the card to a no-fee version to keep the account open without the fee. For example, you have a $95/year card that no longer fits your needs. Instead of closing, ask the issuer if you can switch to their $0 fee card. This way you accomplished the goal (not paying the fee) and kept the account open. Only if no downgrade is available and the fee is truly not worth it would you consider closing – and even then, weigh it heavily.
If having the card is genuinely harmful (overspending risk):
Some people struggle with credit card temptation. If one of your cards is causing you to overspend or accumulate debt because it’s just “too available,” then that’s a behavioral consideration. For such folks, keeping a card open might not be worth the risk of falling into debt. They might choose to close an account for the sake of financial discipline. Another approach is to literally destroy or hide the card but keep the account open. You could, for example, cut up the card or give it to a trusted person to hold, so you can’t use it, but the account stays active on your credit report. This approach preserves credit benefits while removing spending temptation. But if even having the account is problematic (perhaps you’d call the number to get a new card, etc.), then closing it might be warranted for your personal finance health. This is a case where mental/emotional well-being and spending control trump credit score concerns.
If a lender specifically advises it in a unique situation:
As noted earlier, occasionally during big loan underwriting, a lender might suggest closing an unused account or two (though this is not very common these days). If a mortgage lender says “we’re concerned you have too much available credit that you could use, please close one account to proceed,” then you might do it. But this is pretty situational and typically only comes up if you have an unusually high number of open cards or extremely high credit lines relative to income. Even then, some experts would negotiate to perhaps just lower a credit line rather than close. So this is a rare exception.
If the card is in danger of being closed by the issuer due to inactivity:
Technically, this is an argument for you to keep it open by using it! But mentioning here: issuers may close accounts that haven’t been used for a long time (say, 1-2 years of no activity). To keep a card open, you should put a small charge on it every now and then. If you truly never want to use it and the bank closes it for you, that outcome is the same as you closing it (except you didn’t initiate). So better to occasionally use it to prevent that. If you’re absolutely done with the card and don’t care, the issuer might eventually close it – but ideally, you’d proactively make the decision rather than have them do it unexpectedly.
How to Manage Cards You Keep Open (Without Hassle)
If you decide to keep a credit card open, especially one you’re not using regularly, here are some tips to manage it easily:
- Set up a small recurring charge on the card (and autopay): For example, put your monthly Netflix or Spotify on that card. This keeps the card active with minimal effort. Then set that card’s bill to be paid automatically from your bank each month. This way, you maintain activity, avoid the issuer’s inactivity closure, and don’t miss payments. It’s “keep open and forget” in a safe way.
- Keep the card info recorded securely: Even if the physical card is in a drawer, have the account login or card number somewhere secure so you can monitor the account online occasionally. Check that there are no fraudulent charges and that everything is in order.
- Watch for any changes in terms: Sometimes, if you’re not active, you might miss a notice that the bank is adding a fee or changing rewards. Keep an eye on emails or letters from that card’s issuer. Typically, no-fee cards remain no-fee, but stay informed.
- Use it periodically: Every few months, use the card for a purchase just to ensure it stays active. Even a tank of gas or a grocery run on that card, followed by paying it off, is enough.
- Leverage it when needed: If an emergency or big expense comes up, remember that card is available. It’s better to put a surprise expense on an existing card than to scramble for a new loan. Having kept the card open means you have that safety net ready.
By managing open cards with these strategies, you get the benefits (credit score boost, available credit, etc.) without much hassle or risk.
How Tools Like Kudos Can Help You Benefit from Keeping Cards Open
When you maintain several credit cards open, staying organized is key to reaping rewards and perks. Kudos is a free financial companion that helps you maximize your credit card rewards by tracking hidden perks and suggesting the best card at checkout. This kind of tool is perfect if you’re keeping cards open to take advantage of them. Kudos will:
- Remind you which card to use for which purchase to get the most points or cash back (for example, if one card gives 5% on groceries and another gives 3% on gas, it will nudge you accordingly).
- Alert you to any perks on your cards (maybe that old card you kept open has purchase protection – Kudos can remind you if you’re buying a new gadget, so you use that card for the extra coverage).
- Simplify tracking by showing all your card rewards in one place, so even if one card isn’t used often, you won’t forget about it.
And since Kudos is free, it’s a no-brainer to use it to ensure the cards you keep open are working for you. In fact, to sweeten the deal: use code GET20 on Kudos and you’ll get $20 back after your first eligible purchase – a nice perk just for using your cards smartly! Essentially, by keeping your accounts open and using a tool like this, you’re maximizing benefits while minimizing effort.
FAQs: Keeping Credit Cards Open
Does keeping a credit card open help my credit score?
Yes, in general keeping cards open helps your credit score (or at least, closing them can hurt it). An open card contributes to your total available credit, which can lower your credit utilization ratio if you have balances on other cards. It also can continue to age and add to your length of credit history. Both factors are significant in credit scoring.
The only time an open unused card might not help is if having a lot of available credit somehow spooks a lender in manual review, but that’s usually not an issue. The positive impact on automated credit scores from keeping accounts open usually outweighs any other concerns.
How long should I keep a credit card open?
You can keep a credit card open indefinitely if it’s in good standing and the issuer doesn’t close it. There’s no rule that you have to close a card after a certain time. In fact, some people have cards they’ve kept open for decades. As long as a card is beneficial (or at least not costing you or hurting you), you might keep it open forever.
It’s wise to periodically review if a card still makes sense to keep, especially if it has an annual fee. But if it’s a no-fee card, there’s really no downside to keeping it open for life. One thing to remember: use the card occasionally so the bank doesn’t decide to close it for inactivity after years.
Will my credit card account stay open if I don’t use it?
Credit card issuers can close an account due to inactivity, though policies vary. Many banks will not close an account until it’s been inactive for a very long time (like 12-24 months or more). However, some might send a warning or close as soon as 6 months of no use, though that’s less common. To be safe, if you want to keep it open, use the card at least once or twice a year.
Even a small purchase resets the inactivity clock. If an account does get closed for inactivity, it will show as closed by issuer on your credit report – which isn’t as bad as you closing it (in terms of personal record), but the credit effects (loss of available credit, etc.) are the same. So it’s better to give it a little activity to ensure it stays open.
I have too many credit cards. Is it bad to keep them all open?
Having multiple credit cards open is not inherently bad as long as you manage them responsibly (pay on time, keep balances low). In fact, having multiple cards can increase your overall credit limit and diversify your credit, which can help your credit score. Lenders in the future might look at the number of open accounts, but if your credit score is strong and you handle all accounts well, it usually isn’t a problem. However, if managing many cards is overwhelming for you, it’s okay to streamline.
Just try to close cards strategically (maybe newer ones or those with fees) and keep older/no-fee ones open. Many people successfully keep a dozen or more cards open and just use a system to organize them (like labeling which to use for what, or using tools like Kudos to optimize). The key is knowing yourself – if having 10 open cards means you’ll forget payments or overspend, then that’s too many for you. But from a credit score perspective alone, having many open cards with low utilization and good payment history is generally a positive.
Should I keep my first credit card open even if I don’t use it?
Yes, if possible. Your first credit card is likely your oldest account and provides a foundation for your credit history. Even if you’ve outgrown that card (maybe it has a low limit or no rewards), if it has no annual fee, keep it open. You can tuck it away or use it for a small recurring charge as mentioned. The age of that account and the fact it’s an established line of credit in good standing is valuable.
Many people regret closing their oldest card when they later see their average credit age drop. Unless there’s a compelling reason (like a fee you can’t downgrade), keep that first card. It’s a key part of your credit “DNA.”
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