When Should You Cancel Your Credit Cards?

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Million Mile Secrets reader Micah emails:

What card, if any, in your arsenal have you kept open and maintained the longest?  Or do you always close them out after completing the minimum spending and receiving the sign-up bonus?
Keep up the great blog!
When Should You Cancel Your Credit Cards

How Do You Decide Which Cards to Keep?

Which Card Have I Kept the Longest?

I still have an old Capital One credit card that I signed-up for in college.  That was before I knew better!  It sure bought me a lot of pizza in college. :)

But I still have this card sitting in my drawer, after all these years!

Why Keep Your Oldest Credit Card?

It’s good for your credit score.

According to FICO, 15% of your credit score is based upon your length of credit history.  This is especially important for folks, like me, who apply for new credit cards every 3 to 4 months.

A credit card usually stays on your credit report for 10 years after you cancel the account, unless there is a late payment or no payment.

The Length of Credit History, or the average age of your credit accounts, will almost always decrease when you start applying (NOT when you cancel!) for a lot of new credit cards for the 1st time.  That’s because you likely have only a few old credit card accounts and applying for new credit cards reduces the average age of ALL your credit cards.

When Should You Cancel Your Credit Cards

Keeping a No Annual Fee Card You Don’t Use Anymore Can Improve Your Credit Score Over Time

Closing a credit card account does NOT impact your length of credit history immediately, because it remains on your report for 10 years after you close it.

Your credit history will drop again when a card falls off your credit report after 10 years.  You can reduce the impact of this by applying for new cards within the 10 year period  So applying for new cards can help and hinder your length of credit history.

Keeping old cards is the best step you can take towards maintaining a longer credit history.  My old Capital One card doesn’t charge an annual fee.  So it doesn’t cost me anything to hang onto it.  This is one reason why everyone should have a no annual fee card.

I use the Capital One card for a small purchase once every 6 months so the bank doesn’t close it because of inactivity.

The Chase Freedom card is my favorite no annual fee card.  You never have to cancel it and with the 5X points rotating category bonus you can still get a lot of points.  So it doesn’t have to sit in your drawer like my old Capital One card.

Don’t Cancel a Card Right After You Earn the Sign-up Bonus!

You should never cancel your card right after you complete the minimum spending to earn the sign-up bonus.  Banks frown upon this practice and it could get you blacklisted (if you do this continously), which means no more Big Travel with Small Money for you!

Also, if the annual fee is waived, there’s no reason to cancel the card immediately.

When Should You Cancel Your Credit Cards

Canceling Your Card Right Away Could Make the Bank Angry, and When the Bank Gets Angry You Lose!

I like to keep a card ~8 to ~10 months and then decide if the card is worth the annual fee.  This helps establish a good relationship with the banks.

I evaluate whether paying the annual fee is worth the benefit of keeping the card.  Many cards offer perks like free checked bags, free hotel nights etc. for keeping the card.

So for example, the Chase Hyatt card has a $75 annual fee, but you get 1 free night at any category 1 to 4 Hyatt hotel each year you keep the card.

When Should You Cancel Your Credit Cards

You Could Use Your Free Night From the Chase Hyatt Card to Stay at the Grand Hyatt Baha Mar, Which Is Worth More Than the $75 Annual Fee!

There are lots of Hyatt hotels that cost more than $75 per night.  So the benefits of this card are worth more than the cost of the annual fee.  And it’s worth paying the annual fee if you plan on using the free night each year.

If you have a card that isn’t worth the annual fee, sometimes the bank will offer you incentives to keep the card when you call to cancel.  This includes statement credits and miles, which could help make up for the annual fee.

Bottom Line

I still have a Capital One card that I signed-up for in college.  This card doesn’t charge an annual fee, so I hang onto it because canceling your oldest cards can hurt your credit score.

Never cancel a card immediately after earning the sign-up bonus!  The banks do NOT like this and they could prevent you from signing-up for new cards in the future.

I suggest keeping a card until ~2 to ~3 months before the annual fee is due, and then decide whether the card is worth the annual fee.

Thanks for your question Micah!

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20 responses to “When Should You Cancel Your Credit Cards?

  1. My wife currently has the Chase Sapphire Preferred, and we plan to drop that down to the no annual fee Chase Sapphire to serve the purpose of creating a history earning card. I’ve seen everywhere that the Chase Freedom can be linked to ultimate rewards through the two Chase Ink and CSP, but what about the regular Chase Sapphire card?

  2. I’m a new MS’er. I recently got approved for 4 AMEX cards. I have BCP (planning to keep long term), Amex Everyday (keeping long term just to keep MR alive), Biz Gold Rewards (75k signup bonus after $2k w/ AF waived first yr– planning to cancel prior to annual fee coming up), and Platinum (100k signup after $3k, but $450 annual fee). Incidentally I’ve also accrued a bunch of other cards all within the last 1.5 months (Chase Ink Bold, Chase Freedom, Discover IT, Barclay Arrival Plus World elite)…..

    I was going to cancel the Amex platinum pretty immediately after i met the min spend and signed up for all the perks (Global entry x 4 additional cardmembers, $200 airline incidental), and had been planning to do this within the first month if possible. The Platinum benefits are attractive but honestly I rarely travel so would not be that useful. After reading your article, as well as others that say I may never get platinum benefits once I’ve signed up for them before, i’m a little hesitant what to do now …. What would be your recommendation?

  3. I use a spreadsheet with conditional formatting to alert me about cards I need to call and cancel before they’re due for an annual fee. I also set google calendar alerts.

    I’ve had all kinds of success getting annual fees waived, transferring my account to a no-annual-fee card, and getting big bonuses for not canceling… the best rule of thumb is that you’ll never get what you don’t ask for.

  4. Hi Daraius, i just signed up for citibank executive cards about a month ago. And last week i applied for the second one. They both got approced. The reason i applied twice is obviously because of the enormous sign up bonusses. But i don’t want to keep both card since the annual fee is pretty high.
    Any advice how to cancel both cards without being red flagged in the future? I mean, what to say to the reps when we call?
    I still want to apply with citi when they have another cdazy sign up bonusses.
    Thanks.

  5. I had 38 credit cards and was not sure if I should start to cancel some or not. Last week I applied for 4 credit cards got turned down immediately from Capital one which started to scare me put in for wells fargo and they had to review put in for US bank club carlson and they had to review and put in for a Barclay card and they had to review it. Received approval on US bank and wells fargo a few days later by email and still waiting on Barclay card. I’m going to cancel a carnival cruise line card next week. How many cards is to many?

  6. I closed a Chase United Mileageplus card a 7 months ago because I usually don’t fly United a lot, and thought I needed to cancel in order to be able to wait a certain length of time to reapply and get the bonus and because I was accumulating so many Chase cards (2 Soutwests, 2 Chase Sapphire Preferreds, Chase Freedom) Now, wouldn’t you know it, I’m flying United more than ever and getting stuck with baggage fees. I had the card almost 3 years before canceling. How long do I need to wait before reapplying to get the bonus?

  7. My US Airways card annual fee was due August, 2014 so after reading your post, I called Barclays to cancel the card. I accepted their offer to waive the annual fee and 5K miles if I spent $1K in the next 3 months. Naturally I kept the card for another year.

  8. Very helpful post Daraius, thank you — particularly the emphasis that closing a long held card does not necessarily count against one’s credit score. In my case, I’ve had a Chase/Amazon card for a decade, but now never, ever use it. (so many ways to get far bigger discounts at Amazon throughout the year, from current amex promotions to chase freedom in 4th quarter, etc.)

    Then too there’s the factor of not having too many chase cards. In part thanks to you’re writings over the years, I’m thinking to get more of the chase hotel cards (hyatt, marriott, etc) and already have IHG, Freedom, Ink & SapphireP…. thus am thinking it may be prudent soon to ditch the amazon card. (before some backoffice Chase person says I’ve hit a “limit” on chase cards)

  9. Diamond Vargas

    @ Jonnie W – Generally you need to wait 24 months from cancelling a card with Chase before you can sign up and get the bonus again. Luckily there’s an easy solution for you in this case: get the business version of the Mileageplus card — same benefits (free checked bag, etc.)

  10. Slightly off subject, but I was looking at the Baha Mar as mentioned above. However that hotel is not yet open and according to a Hyatt rep they will not be taking reservations until after Feb 2015. The Baha Mar complex is supposed to open Dec 2014 but that is just a projection. The development was started back in 2011. Once the complex and hotel are finished being built they may very likely change the Category. I wouldn’t count on it remaining a 4.

    If anyone has additional info on Baha Mar, please share.

  11. Like ferry’s comment above, I’d also like to know if you have any insight as whether Citi would put me on the blacklist if I canceled 3 AA Executive cards and only kept one. TIA!

  12. @Diamond Vargas — Brilliant idea! Thanks.

  13. OK, so I have an Amex Starwood Preferred coming up for renewal in August. So I called them to cancel since I just opened an SPG Business last month. They offered me 1,500 points, but I’d still have to pay the $65 annual fee. That’s not worth it, is it?

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  15. @Brenton – You can transfer points from the regular Chase Sapphire card to the Sapphire Preferred or Ink cards.

    @ferry – You won’t get the fee back if it has been more than 38 days.

    @Panama Jim – Depends on your income, credit history etc. But 38 is a lot!

  16. I’m pretty sure the answer is yes, but I meant, can you transfer points from the Chase Freedom to the Chase Sapphire.

  17. @Brenton – Should be possible, but not personal experience.

  18. Darius, I was on my DH’s citi dividend card for a long time. He has had it for 10 years now. Then I removed myself from it about two years ago (don’t ask why). It still shows on my credit profile. Do you think it would help my credit history to become an AU again on that card? Number is still the same. I personally don’t have any card left in my wallet that is 10 years old (if only I knew better).

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