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Should I cancel my credit cards if I don’t use them anymore?

Feb. 06, 2022
6 min read
Should I cancel my credit cards if I don’t use them anymore?
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Editor’s note: This post has been updated with new information.


By the time you’re well into your tenure as an award traveler, your wallet is likely split into two groups. You have everyday cards, such as the Chase Sapphire Reserve, that you swipe frequently to take advantage of their generous bonus categories, and you probably have other cards you rarely use. So there are two questions: Should you cancel cards that you no longer use; and what will it do to your credit score?

Opening or closing a credit card is not something you should do lightly, and cardholders are spot-on for thinking about the consequences of this decision. There are a few things you will want to consider. The first involves one of the most important aspects of your credit score: the amount you owe compared to the amount of credit you have (frequently referred to as your credit utilization rate). This is all about how much of your overall available credit you are using, and it makes up 30% of your FICO score. If the cards that you don't use very often make up a large portion of your current credit, closing any of them could have a massive impact on your score.

(Photo courtesy of FICO)

As an example, let’s say you currently have combined credit lines of $100,000 across all of your card accounts. At any given time, you might have an average of $5,000 worth of balances among these cards even if you do pay them in full each month. That gives you a utilization rate of 5% ($5,000 ÷ $100,000). If two cards have $5,000 credit lines, the impact of closing both of them isn’t too significant — $5,000 ÷ $90,000 = 5.56%. However, if each card has credit lines of $30,000, the impact is much more significant. You would still have the same balances ($5,000), but would now have that spread over just $40,000 of available credit. Your utilization thus jumps from 5% to 12.5%. That’s not a danger zone for issuers, but it could impact your score.

Related: 8 biggest factors that impact your credit score

Beyond the credit score, you also need to look at the cards' annual fees to ensure the out-of-pocket costs are more than offset by earning rates and benefits. For example, The Amex EveryDay® Preferred Credit Card from American Express has a $95 annual fee, and while you might be able to recoup that cost by taking advantage of one or two Amex Offers each year, it generally doesn’t make sense to pay a fee on a card that you don’t use. The exception would be a card such as The Platinum Card® from American Express, as the benefits alone make it worthwhile for many.

Related: Amex EveryDay vs. Amex EveryDay Preferred: Which should be in your wallet?

One option that many EveryDay Preferred cardholders utilize is to downgrade their cards to the no-annual-fee Amex EveryDay® Credit Card from American Express, which would preserve your account history and credit lines while saving $95 a year. If you already have the no-annual-fee version, you may have luck downgrading to another card such as the Blue Cash Everyday® Card from American Express (see rates and fees).

The information for the Amex EveryDay Preferred Card, Amex EveryDay Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

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A similar strategy applies to those who have the Chase Sapphire Reserve or Chase Sapphire Preferred Card. While both cards offer compelling value propositions for many travelers, you may want to downgrade to the no-annual-fee Chase Freedom Unlimited. This could also be a good option if you have the Sapphire Preferred and are ready to get the Sapphire Reserve, as Chase no longer allows you to hold both (and requires you to go at least 48 months between earning sign-up bonuses).

Related: Chase Sapphire showdown: Sapphire Preferred vs. Sapphire Reserve

Once you’ve downgraded, it usually makes sense to keep your cards open. If it costs you nothing to hold a no-annual-fee card, and it can help strengthen your credit score, then it’s a no-brainer. However, TPG strongly encourages you to put a small charge on the card every six months or so to keep the issuer from closing the account due to inactivity. If you’re serious about racking up as many points and miles as possible, no-annual-fee cards should play a role in your strategy, as you can keep them open forever to keep your credit score nice and strong.

(Photo by Olleg/Shutterstock)

Despite all of this, there are a few instances when you may want to consider closing cards you don’t use (to make way for new ones, of course). Some issuers limit the number of cards they’ll give you at any one time, such as Capital One, which only allows you to have two personal Capital One cards. On the other hand, Amex has language on its application pages for its cards, including the following related to welcome offers:

“Welcome offer not available to applicants who have or have had this Card or the Premier Rewards Gold Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.”

While there’s no way to know for sure, closing credit cards around the one-year mark may flag an Amex account and cause you to be denied future welcome bonuses.

For full details, check out our Ultimate Guide to Credit Card Application Restrictions.

Bottom Line

While it’s easy to evaluate which welcome bonuses are worth pursuing, it can be harder to decide which cards belong in your wallet year after year. Benefits and transfer partners change, and the strategy you initially used might no longer make sense. You should avoid paying annual fees on a card you don’t use, but other than that, it helps your credit score to keep existing accounts open as long as possible.

For rates and fees of the Blue Cash Everyday, click here.

Featured image by Getty Images/fStop
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023