For some, just getting a credit card in the first place is a huge accomplishment. For others, they seem to accumulate tons of cards, many of which they don’t need or don’t even use. How do you decide which ones to cancel? And how can you do it without affecting your credit score in a negative way?
The first step in deciding which cards to keep is literally setting them all out in front of you to see what you are dealing with. Reviewing your credit report may also be important, in case you actually don’t have all the cards handy. Ask yourself the following questions about each card, and divide them into groups based on your responses:
- How often do I use this card?
- How long have I had this card?
- How much do I pay (fees, interest, etc.) for this card?
- What rewards and benefits do I get with this card?
Time to Purge
As you review how often you use each card, consider closing those that are pretty dormant. Unless of course you have had the card for a very long time with a good history. It’s okay to keep a card you don’t use often if you have had it for a long time—this is good for your credit score.
For the most part, you should consider closing your store credit cards. These tend to offer the least benefits to you, and you are better off with a major credit card that has great rewards and you can use anywhere, as opposed to store credit cards that offer you coupons for in-store purchases. This will help you streamline your credit card inventory and leave you with a couple of cards that you will really benefit from using.
Take it Slow
It’s best to not close a whole bunch of cards at once, as this can cause your credit score to dip a bit. You will probably recover quickly, if you have good credit; however, if you do it in stages the effects on your credit score will be minimized. This is especially important if you are planning on applying for any loans (auto loans, mortgage, etc.) because you want your credit score to be as high as possible for the best rates and terms.
How Do I Do It?
Closing credit cards is not difficult. In most cases, you can call the customer service department and request that the account be closed. Be prepared to meet a little resistance, because they will probably try to talk you into keeping your account—they don’t want to lose customers. But, if you are firm and polite, it is not going to be a problem. In some cases, they want a written request, which means sending a quick letter indicating that you want to close the account.
When you close a credit card account, it can take a few weeks (or longer) to show up on your credit report, so be patient. But, do be sure to check your credit report a few months after you finish your purge, to make sure that everything is accurate and only the accounts that you want are still reflected as open and active on your credit report.
It’s so important to stay on top of your credit and be responsible. Nobody needs dozens of credit cards cluttering up their wallet—or their credit report. Pick and choose wisely, and keep the cards that offer you and your credit score the most benefits.