The Value of Unused Credit Cards

People accumulate credit cards in a wide variety of ways, over a large span of years, and for a number of reasons. It isn't always about the need for an easy way to purchase things. Maybe you acquired a new credit card from the Bloomingdale's Department Store when you went on a bit of a shopping spree and exceeded your existing credit limit on a different kind of credit card. Perhaps, you simply responded to the offer of a special discount or percentage off on your first purchase.

Remember the first time that you went to visit the brand new Cabella's store and the store offered you a nifty duffle bag if you simply filled out a credit application. Who could resist? You filled out the credit card application, shopped for an hour or two, and then rang up about two hundred dollars on your brand new credit card. All this, just so you could be the proud new owner of an undersized- but free- duffle bag.


It really doesn't matter how you acquired the cards, because you had good intentions at the time. Unfortunately, you have so many plastic credit cards in your wallet that you can't fit any cash into it even if you did have some. Plus, you don't even use all of the cards on a regular basis. Perhaps you gravitate toward one or another of your credit cards, or maybe it is hit or miss and whichever card touches your fingers first is the lucky winner that gets to slip out of that wallet and into the credit card reading machine that just loves to tack those charges on.

Realistically though, what should you do with all of these rectangles of plastic? Should you keep them and not use them? Should you cut them up and forget about them? Should you continue the status quo and leave well enough alone? Maybe you should just take them out until the holiday season when the extra spending power will come in handy. Perhaps, you should take the time to think about which cards you are actually going to use and get rid of the rest.

You do need to do something though because unused credit cards can be hidden problems for your credit score. It is possible that these very same cards have charges on them that you aren't aware of. Annual fees, subscriptions to services or goods that you unwittingly agreed to when you signed the credit card application, or other charges can exist on your credit card without you even realizing it. Perhaps the late fees and finance charges have begun to accumulate unbeknownst to you because you toss out the envelope every time it arrives simply because you believe there isn't anything charged on your account since you don't actively use it.

However, getting rid of unused credit cards without hurting your credit score is easier said than done. Plus, it is much easier to acquire a credit card than it is to relinquish one. In fact, it is possible that you have credit cards that need to be canceled even though they have never been activated. These cards can also have hidden balances on them.

Before You Cancel Your Unused Credit Cards

Before you cancel your unused credit cards, it is necessary to pay off any existing balances. If you haven't used the card in a long time, simply call and request the information you need. Once you have paid off the card, you can cancel it.

If you decide to keep a few credit cards that you will not use on a regular basis, continue to keep an eye on the balance of the card. Just because you aren't using the credit card, doesn't mean no one else is either. If you see an expense on the statement that you don't recognize, ask about it. Ask other authorized users or call the customer service number and get additional information so that you can determine if it is a legitimate charge.

Additionally, you need to determine the effect that the cancellation of the credit card will create on your credit history. Canceling a credit card account typically lowers your available credit. The closer the ratio is between available credit and used credit, the greater the impact will be. If this ratio increases too much due to a credit card cancellation, your FICO or credit score can be appreciably lowered.

Lending agencies look at your available credit to used credit ratio to determine your credit worthiness. If the cancellation of your unused credit card will not have much of an impact, then cancel it. If the ratio will be increased too much, wait until your level of debt is lower and then cancel the card.

How Are Credit Cards Canceled?

A credit card account can be closed in one of two ways. The consumer can request to have it closed or the company issuing the credit card can close the account. It will be listed on your credit report as one or the other. Obviously, the first way is the best way and it will affect your credit score in a less apparent manner.

Canceling a card is the only way to ensure that a balance does not exist and to avoid unnecessary problems from it. Request written confirmation that the credit card account has been closed and retain this information in a secure location.