Getting Rid of Your Old Credit Card
If you’ve got old, unused credit cards sitting around, then you could benefit in one of two ways by cancelling them.
You could find that your credit score improves by getting rid of your old cards and you will also open yourself up to being able to take advantage of any new customer bonuses that your card provider offers.
However, it is not always completely straightforward and in some cases you could actually benefit by keeping hold of your unused credit cards.
We’ll explain all of this over the course of this guide.
Unused Cards and Credit Ratings
As a general rule, having lots of unused credit cards is likely to adversely affect your credit rating, though this is not always the case.
Basically: the more you responsibly use credit, spending and paying back on time, the better your credit score will be.
Having unused credit cards lying around will generally cause a lender to see you as someone who doesn’t use credit often, thereby restricting your credit history and to that extent making you less of a viable candidate to lend to.
However, the opposite also applies: if you’ve got loads of active credit cards all maxed out, then you will look desperate to a lender, again reducing your eligibility as a candidate for borrowing.
The best thing to do if you have multiple cards is to spread payments across all of them so that you don’t exceed 70% of the credit limit on any of them. This will make you appear as someone who uses credit regularly and well, staying within their budget while borrowing consistently.
If you have several credit cards, the best thing you can do is to cancel a few of them, starting with any unused cards, and then continue to spend carefully across the remaining cards. This will improve your credit score over time.
New Customer Bonuses
Another way you can benefit from cancelling any unused credit cards is by re-opening an account with the same card issuer and taking advantage of any new customer offers they have in place.
Some credit card providers will require you to have not had an active card with them for as long as 12 months before you can re-apply and count yourself as a new customer. Some will only ask for a month. You should therefore always get in touch with your card issuer to find out what kind of waiting period they require before you re-open an account with them.
However, for the purposes of improving your credit rating, it’s often a good idea to cancel the unused card anyway and then either wait until you can enjoy the new customer benefits or simply open up a card with a different provider altogether.
When you do come to open up a new card, you should make sure you shop around and compare available cards online using a free comparison service like ours.
Cancelling Old Credit Cards
Cancelling an old credit card is pretty straightforward; you just need to get in touch with your card issuer. All you need to do is call up their customer services line and let them know that you wish to cancel your account.
It might take a few days for your cancellation to go through so don’t panic if your account is still active for a while after you’ve cancelled the card.
You should check your final statement on your card once it’s cancelled to make sure it’s totally up to date and if you notice any discrepancies, call up your card issuer and let them know.
It’s likely that when you call up to cancel your card, the card provider will try and keep you on their books by offering you various benefits for staying on. If any of these seem attractive then it can be a good idea to take them up on it but otherwise, stand your ground and close the account.