Pros and Cons of Closing an Old Credit Card

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Beware of the consequences of closing an old credit card.

Credit cards are not necessarily meant to be used indefinitely. There are many circumstances in which you will be using one card for a period of time, but your needs will change and you will decide to switch to another instead.

If so, you will have a choice to make: Do you want to close the old card or keep it open? There are pros and cons to each option that should be carefully considered before deciding which approach is best for you.

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Benefits of closing an old credit card

Here are some of the main benefits of closing a card that you no longer use.

  • You won’t have to worry about paying annual fees: If you pay an annual fee for a card you don’t use, it’s just a waste of money. Getting that money back in your pocket by canceling the card is one of the most compelling reasons to close an account.
  • You can get your deposit back if you had a secure card: Many people start with secure credit cards because they are easy to get, but require you to make a deposit. If you have switched to an unsecured card, you may want to cancel the secure card so that you can get your money back.
  • You won’t be tempted to use the card and get into debt: For some people, having a lot of credit available is a temptation. If you are one of them, keeping an old card open can become a problem if you want to make a large purchase and use the card to do so. Closing the account makes it harder to take on debt, which might be a good idea if you’re not sure you’re making a financially responsible choice.
  • You will not have another card to follow: When you leave a credit card account open, you need to think about how to manage it. This may not sound like a big deal since theoretically you can just leave it in your wallet. But if you don’t use it for a while, the card issuers will eventually shut it down. This means you need to load something on it periodically and pay the bill once you have done so.

Disadvantages of closing an old credit card

And here are some of the biggest downsides to shutting down your old card once you’re no longer using it.

  • You could reduce the average age of your credit history by: The average age of your account history affects your credit score. Closing old accounts could reduce it, hurting that score. The possible impact of canceling a card on your credit report is one of the main reasons you may not want to close old accounts.
  • You could hurt yourself credit utilization rate: You could also damage your credit in another way by canceling an old credit account. Another important factor that determines your score is the credit utilization rate – the amount of credit used versus available credit. If you close an account with a lot of available credit, you will have a higher usage rate in the future. This could cause substantial damage to your credit score.
  • You won’t have available credit when you need it: It is not a good idea to charge for purchases on credit cards that you cannot afford. But situations can arise when you need borrow, for example to meet an urgent short-term expense that you could pay back on your payday. If you closed your old credit card account, credit won’t be available when you need it. Although you can apply for a new card, it will take longer than just using your existing card.
  • You will miss out on the benefits the card could have offered cardholders: It is common for credit cards to provide cardholder benefits, such as access to airline lounges or purchase protection. If you close an account, you will no longer be able to enjoy these benefits. While you don’t mind if you don’t use them now, you might regret it if your situation changes.

Which is the best choice for you?

Ultimately, you will need to consider the specifics of your situation when deciding whether it makes sense to cancel a credit card or keep your old cards open. If the card doesn’t cost you money, and you’re sure that it won’t trick you into getting caught up in financial trouble, there is little harm and potentially significant benefits to keeping it open, even if it does. means you need to make an occasional purchase on it every now and then.



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