What do you do with the unused credit cards you have lying around the house? Unless you’re the girl from the book turned movie, Confessions of a Shopaholic, and have your unused credit cards frozen in the freezer, well, we have a few things to share with you.
You are not alone. An average person has up to three credit cards inside their wallets, at least one of these three are unused. Either everything on it has been paid up while others are just expired without even being used. These cards, whether inside your wallet in your purse or a box in your drawer, you know you have to do something about them.
If you continually ask yourself, ‘should I close unused credit cards?’, then you belong to a certain set of people who are considering to close their account. Before you do that, though, put in mind a few things, because whether these are used or unused credit cards, they can easily impact your credit score. And we don’t want anything negative to happen to that score, right? To avoid this, let us share with you a few options.
Some Credit Cards Can Be Securely Cancelled
Most credit cards have an annual fee, but if you’re lucky to have one of those that does not have one or is fairly minimal, it will not hurt for you to keep it open. But if the annual fees are a pain in the tush – in the long run, then it’s smart to cancel it.
The Rewards Are Awesome
If your credit card company offers awesome rewards for using your card (with justifiable fees) – like for hotel credit, gas points, maybe airline miles, or an annual gift – if you think it’s worth your while maintaining it, then please do.
Depending on your credit score, your credit card company might offer you a better card with a low-interest rate and some rewards just because you have been a loyal customer to them.
Goodbye Starter Cards
There is one credit card that we think will make you happy to cancel, and that is your starter card. This is the card you got while you were in college with a very minimal credit line. If you have established your credit score over time, improved credit card offers will be available to you. Eliminate the starter card and think of your options.
Cards You Should Not Cancel
After reading this, don’t just go around canceling all your cards just because you’re not using them. These circumstances are something you should consider:
Credit cards with a balance – for obvious reasons. Imagine what your credit score would be if you cancel credit cards with balances on them.
The only credit card you have – 10% of your credit score is established by the type of credit. This means that you have to diversify your spending habits. How can you prove your ability to handle multiple loans if you have no credit card to show for it?
Credit cards with tons of available credit – if you close a credit card with a balance, you’re screwed; all the same when you cancel a credit card where you have tons of available credit. How would it say in your credit utilization if you cancel a card that you’re barely even using?
We all have to understand the pros and cons of borrowing and lending money. When it comes to money, you have to remember that each decision you make has an impact on your financial status. Address the things you are unsure of with your bank or a professional credit repair service provider.