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Yes keep it open, for the following reasons:
1.) The credit history helps your overall credit score. Closing it down will reduce your credit history, impacting your overall score.
2.) The available credit from each card is factored into your overall credit availability, and then your average balance is tallied against the total credit available.
- Let's say you have two cards with $5K available limit each, for a total of $10K available credit. Let's say you only use one card, and on average your alance on that card is $2500 at any one time. This means your credit utilization is 25% (2500 / 10,000)
- if you close one of those $5K cards down, now your credit utilization jumps to 50% without you spending a dollar more than you were before (2500 / 5000)
If you do spend more on that remaining card and start carrying a revolving balance of (for example ) $4K, your credit utilization rate is now 80%. Higher utilization rates negatively impact your score.
Instead of canceling that card, just put it away out of sight. Leave a small rotsring balance on it, like $50 or something and just pay that off slowly.
Doing this helps your credit score, instead of closing down a card completely.
Thank you so much for all the details this is super helpful!
Closing it will give your credit score negative hit. If it’s free, don’t use it!
The impact is small for CC duration. I just closed a 14 year old CC because it's too much of a risk having it lay dormant (had a card previously brute forced the CVV). Surprisingly my credit score only dropped by a couple of points and it recovered a week later.
Keep the card if you can since it's help your credit history. If it's not very old and you have another older credit card then maybe you're ok. Any negative hit will come back up after few months. Given your overall credit habits are good
The one I no long want to use is over 7 years old. I don’t have an older one. My credit habits are pretty good overall. So trying to see what’s the best thing to do with the old card.
As long as you pay your balance on time and don’t miss payments, your credit score won’t be affected. Keeping a credit card you don’t need, uses up available credit you may need if making other big purchases. Ie line of credit for home purchase etc. Always make sure you close any LOC or CC you don’t need.
Thx so much for all your help. Right now my total credit limit of both cards togetber is 16K. My monthly expenses do not exceed 2K a month. Is it better that I reduce the credit limit of the card I no longer use so I can have a better utilization rate%? I am reading a few article and it seems like 30% is a good rate to have.
Planner1 - that's why I said leave a rotating balance in the card.