I never thought I’d use my credit card from a certain big box home supply store again. One of their policies had ticked me off, and their competitor’s store was closer to my home, so I figured I was done with them. But I didn’t cancel the card. I just tucked it away in a safe place and ignored it.
Recently, though, they sent me a coupon for 10% off a major purchase or 0% financing for 12 months. I had some fairly pricey home repairs coming up and it seemed like too good a deal to pass up. So I dug out the card and used it again.
You’ve probably heard it’s not a good idea to close credit cards you don’t use anymore, since doing so may hurt your credit scores. That’s true — because the line of credit associated with an account you have closed no longer counts toward your total available credit, your “debt usage” ratio may go up, and your scores may suffer. (Not sure what your debt usage ratio is? You can find out with a free credit report summary from Credit.com.)
But there are other reasons why you may want to keep those old accounts open. Here are three of them.
1. Balance Transfers
Stop using a card and the offers for low-rate balance transfers may come rolling in. “I’ve got a drawer of cards I used for balance transfers, paid off, and never canceled,” says Credit.com’s Editor-in-Chief Mike Schreiber. Indeed, some of the best credit card deals may come when you least need them. But if things change — you have an unexpected large dental or medical bill, for example — those offers may come in handy. (Not interested? Be sure to shred them. You don’t want to make it easy for a Dumpster diver to steal your credit information, and perhaps your identity. This guide explains how to help protect yourself against identity theft.)
If you’re not getting great balance-transfer offers from your current card issuers, you can always seek them out. Some of the best balance transfer credit card offers include 0% for at long as 18 months.
2. Discounts & Coupons
Retail card issuers in particular will often flood you with coupons to try to get you back in the store, shopping again. Of course, this can be dangerous if it leads you to overspend. Carry a balance on a retail card and you’ll probably pay a high interest rate. Plus it’s easy to forget to pay a bill on a card you rarely use, as I learned firsthand recently.
If your card issuer changes its terms and you don’t like them, or you want to negotiate a better deal on the card you already have, a credit card with a large available line of credit can be a plus. You can let your issuer know you are ready, willing and able to take your business elsewhere if necessary. And sometimes you can migrate from one program with your card issuer, to another one that’s a better fit. It doesn’t hurt to ask.
Of course, there are times when it makes sense to close a credit card account you don’t use. If you have a co-signer on the account and you are worried they might go on a spending spree, or if your issuer charges an annual fee you think is unreasonable and refuses to waive it, it may indeed be time to part ways permanently.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- An Expert Guide to Credit Cards with Rewards
- How to Get a Credit Card with Good Credit