Why you should keep your credit cards open for more than a year. Here's the thing: There is nothing remotely illegal or even fishy about closing a credit card within 12 months of account opening. Many cards offer a waived annual fee the first year for this very reason.
The bottom line. If you decide you don't want to hold on to a credit card after applying and being approved by the issuer, you can still cancel your account. Think a bit about the consequences before you cancel. If you do decide to cancel, make sure to get a written confirmation of the account closing.
Multiple Hard Inquiries - When you open a credit card, it triggers a hard inquiry on your credit report. Closing a card immediately after opening it and reopening another card leads to two hard inquiries on your report within a short time. This can lead to your credit score dropping further.
Bottom line
Experts generally don't recommend you ever cancel a credit card, unless you're paying for it (such as in the form of an annual fee) and not ever using it. And if this is the case, canceling a card once probably won't hurt you as long as you have a healthy credit history otherwise.
A credit card can be canceled without harming your credit score; just remember that paying down credit card balances first (not just the one you're canceling) is key. Closing a charge card won't affect your credit history (history is a factor in your overall credit score).
You can't decline a credit card after being accepted, but you can always cancel your new credit card if you don't want the new credit account.
Bottom line. If you change your mind and don't want a card that you recently opened, it's smarter to call the issuer to cancel the card than just ignoring it. You might get hit with an unexpected annual fee, or the card will be closed because the issuer considers your account inactive.
In general, it's best to keep unused credit cards open so that you benefit from a longer average credit history and a larger amount of available credit. Credit scoring models reward you for having long-standing credit accounts, and for using only a small portion of your credit limit.
The numbers look similar when closing a card. Increase your balance and your score drops an average of 12 points, but lower your balance and your score jumps an average of 10 points. Two-thirds of people who open a credit card increase their overall balance within a month of getting that card.
If you don't use your credit card, the card issuer may close your account., You are also more susceptible to fraud if you aren't vigilant about checking up on the inactive card, and fraudulent charges can affect your credit rating and finances.
Having more than one credit card may help you keep your credit line utilization ratio per card lower than the recommended 30% by spreading charges. There are potential benefits to having multiple cards, such as pairing various types of rewards cards to optimize earnings on all categories of spending.
There is no universal number of credit cards that is “too many.” Your credit score won't tank once you hit a certain number. In reality, “too many” credit cards is the point at which you're losing money on annual fees or having trouble keeping up with bills—and that varies from person to person.
If you make too many over-limit charges, your credit card issuer could close your credit account. Here are the most common consequences associated with spending over your credit limit: Your credit card could be declined. You could pay an over-limit fee.
You should try to use your credit card at least once every three months to keep the account open and active. This frequency also ensures your card issuer will continue to send updates to the credit bureaus.
In general, you should plan to use your card every six months. However, if you want to be extra safe, aim for every three. Some card issuers will explicitly state in the card agreement what length of time is considered to be inactive.
Opening a new credit card can temporarily ding your credit score. When a card issuer looks at your credit information because you've applied for a credit card, it is a so-called “hard pull.” That can lead to a slight drop in your credit score, whether you are approved or not.
Part of your score is based on the amount of credit you have and the amount you've used – this is known as the credit utilization ratio. So closing an existing card can increase your credit utilization ratio and lower your score.
Canceling a credit card — even one with zero balance — can end up hurting your credit score in multiple ways. A temporary dip in score can also lessen your chances of getting approved for new credit.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
When You May Want to Close Your Credit Card Account. You may want to close a credit card if it carries an annual fee and you no longer get much use from the card. For instance, if you have a travel credit card with a hefty annual fee and haven't used the travel benefits in a while, it could be a good idea to close it.
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
For starters, when you close a credit card account, you lose the available credit limit on that account. This makes your credit utilization ratio, or the percentage of your available credit you're using, jump up—and that's a sign of risk to lenders because it shows you're using a higher amount of your available credit.
FICO credit scores, the industry standard for sizing up credit risk, range from 300 to a perfect 850—with 670 to 739 labeled “good,” 740-799 “very good” and 800 to 850 “exceptional.” A 700 score places you right in the middle of the good range, but still slightly below the average credit score of 711.