When Should You Cancel Your Credit Cards?

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When Should You Cancel Your Credit Cards?

Million Mile SecretsWhen Should You Cancel Your Credit Cards?Million Mile Secrets Team

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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 Credit 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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Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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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).

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

Million Mile Secrets

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

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?

Million Mile Secrets

@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!

@Diamond Vargas — Brilliant idea! Thanks.

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!

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