Should You Ever Cancel An Unused Credit Card?


You may have heard before that you should never cancel a credit card account because it can negatively affect your credit score. However, in certain situations, for certain people, cards or situations, they may need to cancel their credit card. If you never use the card and some of the following factors apply, you may want to consider canceling it.


Raised or High Annual Percentage Rate

Before canceling try to pay off the balance or do a balance transfer to a card with a better APR


High Annual Fee

If you have a very high annual fee that you simply cannot afford, you may want to cancel the card. Before that call the credit card company and ask if they'll lower or take off the annual fee, otherwise you will have to cancel. It may be a long shot, but if you don't ask, you'll never know.


Credit Card Company Threatened To Cancel The Card

If your account is inactive, don't allow the issuer to cancel the card. Make very small charges and pay off the account in full to avoid interest.


Here are three steps to take to determine if you should cancel a credit card:


Review Your Credit History

Check out websites such as Credit Karma or Credit Sesame to review your credit report and history.


Review Your Available Credit

See how much credit you have available. Keep in mind your available credit plays a very large part in increasing or improving your credit score.


Review Your Unique Financial Situation

You know what you can afford, such as annual fees, monthly payments and more. Keep in mind that a closed account will affect your credit score negatively, and it is usually better to keep the account open, make small purchases, and payoff, rather than close an account.

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