Home > 2015 > Credit Cards

Should I Cancel My Old Credit Card When I Get a New One?

Advertiser Disclosure Comments 0 Comments

It used to be in your wallet, but now it’s in a drawer. When you got it, it seemed like a good enough card. But now, you’ve found another. Maybe the new one is giving you more money back when you buy groceries, or maybe the interest rate is lower. For whatever reason, the old card isn’t seeing much action these days, and keeping it around seems like more trouble than it’s worth.

Do you just cancel it? The answer is the ever-frustrating, “It depends.”

First, here’s who probably shouldn’t cancel the old card: people who are fairly new to credit. Your credit history is short, and if you are looking to improve your score, you’ll want to establish credit references that will, over time, help you build a track record of on-time payments.

Still, there are circumstances when it’s fine to cancel, or to ask your issuer if you qualify for a different card. If you are paying an annual fee and do not think it’s worth it, for example, or if you have a secured card and now qualify for a standard card, it may be reasonable to get rid of the card or to switch to a different card from the same issuer.

It’s also important to keep an eye on how much of your available credit you’re using. This new card may be helping your score if it reduces the amount of debt you have relative to your available credit (and we’re assuming you plan to keep your spending levels about the same). Less credit usage is better, and using less than 10% of your available credit is best. If canceling that old credit card would move your debt usage higher than that, think twice. When you’re comparing cards, be sure to look at both terms and credit limits.

Another reason you may want to keep your old, unloved card is because the average age of your credit is a factor in your credit score. Other factors, such as on-time payments, count more, but when you are establishing credit, you want every point you can get because a higher score can get you lower interest rates. (By the way, there is no need to carry your old, unloved card. You could do something as simple as putting a small, recurring bill on the card and setting up automatic payment to be sure there is enough activity to keep the issuer from canceling it.)

When Is Canceling OK — or Even Smart?

There are some people who can cancel an old card without worry. They’re the ones who may not even recall the last time they used a particular card. Their credit is well established, and their credit scores are high with low utilization. They may wish they didn’t need to check quite so many accounts — and identity theft experts recommend that you check your accounts regularly. If you never use the card, it’s easy to forget about an account, and if it’s used fraudulently, clearing up the mess could turn out to be a hassle.

If your credit utilization is low, it’s probably OK to go ahead and let go of a card that once was a good fit but is no longer. Even closed, it should remain on your credit history — for up to 10 years. Canceling a credit card does require taking a good look at your overall credit picture and gauging the potential effect. It’s OK to switch cards — and it’s understandable that when you apply to get a big bonus you may not want to keep every card you’ve ever been approved for. While you should think twice about canceling a card, sometimes there’s no harm in doing it.

If you want to understand how your credit cards are affecting your credit, you can get your free credit report summary from Credit.com, where you’ll see a personalized overview of what’s influencing your scores.

More on Credit Cards:

Image: Big Cheese Photo

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team