Should You Cancel the Store Credit Cards You Opened During the Holidays?

The quick answer is that it depends what benefits those cards give you.

Between gift-giving and sales galore, many people spend a lot more money at retailers during the holidays compared to the rest of the year. If you did a lot of in-person shopping this past holiday season, you may have been tempted to sign up for a store credit card.

A store credit card is a card you can use with a specific retailer. Often, these cards come with incentives like reward points on your purchases that can be redeemed for store credit. And many store credit cards offer an initial discount for signing up.

For example, you may have been offered 10% off of your purchase for opening a new store card. If you're spending $300, that's a lot of savings. But what if you're not planning to use your store cards often? Should you close the accounts you recently opened? Ask yourself these two questions to find out.

1. Do my store credit cards open the door to more spending?

If you're a disciplined spender who sticks to a budget, then having a few extra store credit cards may not be a bad thing. If you use them minimally, or limit yourself to charges you can easily pay off, then there's really no harm in keeping those cards around. Plus, by holding onto them, you may be entitled to cardholder perks. Say you can score 30% off your purchases once a quarter -- that's a benefit you may not want to give up.

2. Could I use the higher credit limit?

One big factor in your credit score is your credit utilization ratio, which measures the amount of your available credit you're using. The higher your total credit limit across your credit cards, the easier it is to keep your ratio in favorable territory. Although store credit cards don't tend to come with high spending limits, they add to your total limit nonetheless. And if you make minimal charges on those cards, they may improve your credit score.

What's the right call?

Store credit cards have their drawbacks, such as high interest rates. But they also have their perks. If you feel you can benefit by hanging onto your new store cards, then it could pay off.

That said, if you close those cards, it may not hurt your credit score much, if at all. If you have a high credit limit across your remaining cards, losing the spending power of your store cards may not make a huge difference. Closing out long-standing credit card accounts can negatively impact your score, but if your cards were opened just a month or so ago, that shouldn't be an issue.

There's nothing wrong with keeping a few store credit cards in your mix. But if you hang onto a card you expect to use rarely, store it somewhere safe. You may be less likely to spot fraudulent activity on credit cards you don't use, but you can limit that risk by keeping them secure until you need them.