No. of Recommendations: 1
Inactive cards do not hurt you at all. To the contrary they can help you.

In fact, cards that are inactive more than 6 months aren't counted at all for anything. So closing them or keeping them laying around is identical. The only reason to cancel one is 1) if you feel like it, or 2) if they charge you a fee (definitely cancel it then!).

One big factor in your credit score - probably after length and on-time credit history - is utilization ratio. That is, your average balance is $X and your total credit limit is $Y. X/Y is your utilization ratio. The lower that ratio, the more responsible you look credit wise.

So if you have some inactive cards, you could consider using them once every 6 months to keep them active. Then, for the 5 other months, it adds to your Y, but not your X. And if it's just one small charge, even that one month you used it, it still helps your utilization.

A particular incentive to do this is if it's your oldest card. If this is the case, keeping it 'active' not only helps your utilization, but also extends your credit history further back, which also helps your score.

But if you don't want to bother with all this stuff, just close them. If you continue to pay responsibly, on time, and use a reasonable amount of your credit, you'll be just fine.
Print the post  

Announcements

UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement