Should You Cancel Your Old Credit Cards? The Pros and Cons


If you have old credit card accounts (such as a Visa or MasterCard from your college days), you may be wondering if you should cancel them.

Here are the pros and cons of canceling old credit card accounts — they’re from Ken Lin, CEO and Founder of Credit Karma. He also reveals two surprising tips about your credit cards…

First, a quip about debt:





“Credit buying is much like being drunk,” says Joyce Brothers. “The buzz happens immediately and gives you a lift…. The hangover comes the day after.”

If you’re suffering from a debt hangover, you might be wondering if you should cancel your credit cards – and that’s where financial expert Lin comes in!

The Drawbacks of Canceling Old Credit Cards

1. Old credit cards can help build credit history and credit scores. Based on our data, people who have of at least four years of open trade lines have the best credit scores on average. For most consumers, credit cards make a bulk of their credit history. Closing old credit cards can lower your credit score if you don’t have a long credit history. In addition, old credit card accounts build your available credit and lower your credit card utilization which is another metric that can affect your credit score.

If you have a bad credit report, read Fixing Bad Credit Scores – 3 Tips for Rebuilding Your Credit.

2. Old credit cards are good for financial emergencies. If you have an unexpected financial emergency, old credit card accounts can be very useful in gaining access to capital. While we should all have 3-6 months of savings in an emergency savings fund in case of job loss or illness, but most of us don’t. Old credit card accounts are great for bridging this additional level financial security.

If you have alot of credit card debt, read How to Get Out of Credit Card Debt When You Can’t Make Minimum Payments.

The Benefits of Canceling Old Credit Card Accounts

1. Old credit card accounts can be a temptation and liability.  For some people, having extra credit is a reason to splurge or makes them feel wealthier than they actually are. In these cases, it may help to close access to these lines of credit. In addition, old credit card accounts are generally more difficult to manage and maintain. Old cards that you don’t use can lead  to higher incidences of theft or fraud since they are often forgotten.

2. Old credit card accounts can have annual fees.  If you applied for a card when you had poor credit or if you didn’t pay close attention, your credit card may have annual fees. In a competitive financial environment and with good credit, consumers shouldn’t pay annual fees for credit cards that they don’t use.



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With benefits like fraud protection, cash back and rewards programs, credit cards are a convenience for many, which may be why the average consumer has 8-9 credit cards.

How many credit cards are too many? Eight credit cards are too many to manage. I suggest that consumer should have 3-5 general use credit cards from different issuers, so they can diversify their exposure to a tight credit market. Cards should also be chosen based on their usage not because the power of their marketing. For example, don’t get a reward card if you always carry a balance, you will pay a much high rate which will cost you much more than any rewards you accrue.

If your credit card or financial life is out of control, read 6 Ways to Take Control of Your Finances.

Ken Lin is the CEO and Founder of Credit Karma, a pro-consumer credit score company dedicated to helping consumers better understand the power of their credit. 

If you have any thoughts or tips on canceling old Visa or MasterCard accounts, please comment below!







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