I Have Several Credit Cards I Never Use. Here's Why I Won't Cancel Them

I'm better off keeping those accounts open.

These days, I make the bulk of my purchase on two or three credit cards. But I have more cards than that in my name. In fact, several credit cards of mine are ones I've had for many years. I don't tend to use them, however, because their rewards programs aren't so great.

One of my older credit cards, for example, only offers 1% cash back on purchases across the board. By contrast, one of the cards I use regularly offers 4% back on gas fill-ups.

You might assume that if I have credit cards I don't use, it makes sense to just cancel them. But here's why going that route may not serve me well.

I don't want to damage my credit score

While my credit score isn't perfect, it's in pretty good shape. But I know that if I cancel my older credit cards, I'll end up dragging my score down. 

See, FICO Score (the most commonly used credit score) is comprised of five components, each of which is weighted differently:

• Payment history: 35%
• Credit utilization/amounts owed: 30%
• Length of credit history: 15%
• New credit cards: 10%
• Credit mix: 10%

I make a point to pay my bills on time, so I'm not worried about my payment history. I also have relatively low credit card balances relative to my total spending limit, and I make a point to pay off my cards in full each month. So credit utilization isn't a concern for me, either. 

I also know that I happen to have a healthy credit mix (since I have a mortgage loan as well as credit cards). And I always make sure not to apply for too many new credit cards at once.

Meanwhile, the length of my credit history is pretty decent since I have some older credit cards. But if I were to close those accounts, it would shorten the length of my credit history, thereby dragging my score down in the process. 

And that's why I'm better off keeping those credit cards open. Since they don't charge an annual fee, I'm not losing out financially by hanging onto them. All they're really doing is taking up space in my safe, which isn't a big deal at all.

Think twice before you close an old credit card

You may end up in a similar situation to mine where you have an old credit card or two that no longer serves your needs. Before you rush to close your accounts, think about how they might impact the length of your credit history. 

Another thing to consider is those cards might also lend to a higher total spending limit, which could help you keep your credit utilization down. In my situation, that's not really something I think about, because my total credit limit across my various cards is way more than I could imagine spending at once. And those older cards of mine happen to have lower spending limits, since I never bothered trying to increase them. But that's yet another reason not to rush to close an old credit card account.