Should You Close Your Credit Card?

 Are they hurting you?

The overarching rationale for closing any card is its detriment to your finances. In other words, if it costs you money, close it. Every dollar spent on something offering nothing in return loses value across the board. Get rid of the dead weight.

 If it’s not costing you money, what’s it offering you?

If it’s a free card, then it’s not hurting you. But you may still be inclined to close something you never use. With no fee, there’s unlikely to be perks of any significance, so it’s not immediately valuable. But consider your broader financial health.

Good credit scores rely on a strong utilization rate and the number of accounts you have. You may not use it, but that $15,000 limit is lowering your utilization by that much, and the account may be the one taking over the threshold to a good score. In this case, closing the card would do more harm than good.

 Its perks

It’s possible for a card with a fee to provide value without using it, too. Consider a co-branded airline card with a $95 annual fee. It may not offer much, but a free checked bag for everyone booked on the same ticket. If you fly that airline more than once or twice a year with your family, that annual fee can be covered twice over. Of course, this requires you to use the card when you may not have otherwise. It’s a good chance for you to check unused perks on some of your cards.

 But don’t listen to me too much

As much as I fully back these tips, sometimes it’s the right decision to close it anyway. A lot of people find themselves anxious at having so many open accounts, while others feel a little insecure about having multiple lines of credit to organize. If it’s impacting your life negatively, just close it. Your credit score will recover. Just make sure you transfer your points out first!