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Hey, everyone, thanks for joining me this week. My name is Laura Adams and I’m a personal finance and small business expert and author who’s been hosting the money girl podcast since 2008. If you’ve been listening for any length of time, you know, this show is all about helping you get the knowledge and motivation to prioritize your finances, build wealth for the future, and have more security and less stress.

Every show is created to make sure that you come away with some practical advice, tips, hacks, a lot of things that will just help you make better money decisions, and ultimately take your financial life to the next level. If you’re not already subscribed to the show, be sure to do that I would love you to also participate by sending me any money questions or comments that you have, you can do that in a few ways. One is to leave a voicemail message 24/7, all you have to do is call three zero to 3640308. Or you can email me using my contact page at Laura D adams.com. Or you can connect with me on Instagram at Laura D Adams. And we always publish a companion blog post or what we call the show notes.

For every episode. They’re always published in the money girl section at quick and dirty tips.com. Today’s episode is number 703. Called what to know before you cancel a credit card. This show was inspired by a great question that I got recently from Caitlin. Oh, she says I’m a big fan of the money girl podcast and have been listening for years.

A while ago, I racked up substantial credit card debt. So I opened a balance transfer credit card and worked really hard to pay it all off within the 0% APR period, which worked out great. However, now I’m stuck with a super basic credit card that doesn’t offer any rewards. While I don’t want to waste time with this card, I’m also really nervous about closing it and messing up my credit score and thinking about closing it and requesting a credit limit increase on another card I have that does pay rewards.

What do you think about that strategy? Caitlin, thank you so much. I’m so glad to know you’ve been a part of the money girl community for a while. And I really appreciate you sending in this great question. As you mentioned, managing credit cards properly is an essential part of building excellent credit. And unfortunately, many people mistakenly believe that closing credit cards will automatically improve their credit. But the opposite is true, because canceling credit accounts can instantly damage your credit. It’s amazing how many conversations I’ve had with people who have said, Yeah, I’m really looking to increase my credit and prove more credit. So I’m just going to cancel a bunch of my credit cards, they don’t have any idea that that’s actually going to hurt them in the short term. Now, that being said, I’m not saying that it’s never a good idea to close a credit card. So that’s what this show is about. We’re going to review what you should consider before canceling a credit account how you can minimize the hit to your credit, and some tips for closing credit cards strategically. So if you’ve ever wondered what would happen if you closed your credit card, or you’re just curious to know, even if it’s not something that you’re planning on doing, this show is for you, I hope you’ll stick with me.

Before we get into the pros and cons and kind of the nitty gritty of canceling credit cards, I want to take a step back and just briefly review why having good credit matters in the first place. Many of you are very familiar with this, but a lot of people don’t understand that credit affects multiple aspects of your financial life. So I’m going to beg you don’t listen to anyone who tells you that credit doesn’t matter that it’s just a game that you don’t need to have good credit that you know it’s just inconsequential. Most people know that having good credit allows you to get the most competitive interest rates and terms on credit accounts. So I’m talking about things like credit cards, mortgages, car loans and personal loans.

Here’s a quick example. If you pay 1%, less for a 30 year fixed rate mortgage, because you’ve got great credit, that could end up saving you over $100,000 in interest, depending on the total amount borrowed, and how long you own the home. But here is the kicker, even if you never borrow any money for a home or a car, or you choose to use cash instead of credit cards, having good credit improves your finances in other ways.

So I’m going to run through a few of them. One is reducing your auto insurance premiums in most states, all but three states right now, evaluate your credit pretty significantly when rating you for your auto insurance premiums. So if you drive, you know, you have to have auto insurance. And if you have poor credit or average credit or no credit, you’re paying more for those premiums than you would if you had good or excellent credit.

In some cases, it’s double or triple the amounts depending on the state where you live. This is also true for home insurance premiums. Most states evaluate credit for your home insurance premiums. So you know, again, these products auto and home insurance are aren’t you know, are required for mortgages, if you’ve got a mortgage, you’ve got to have home insurance. And they can be pretty substantial. So if you don’t have great credit, you are likely overpaying for those products. Good credit can also give you more rental housing opportunities. So if you’re somebody who says, you know, I don’t want a mortgage, I’m not going to borrow to buy a home, I want to be a renter, you are going to have fewer rental opportunities if you have poor or even average credit.

Credit also affects the security deposits that you might have to pay on not only a rental property, but also your utility accounts. So things like gas, electric cellphone plans, etc. Having Good Credit can also make you eligible for more government benefits. A lot of people don’t realize that credit is a factor in some government benefits. And it can also make you more attractive to potential employers that check credit.

In many states employers are allowed to review your credit files, they can’t see your credit scores, but they can see enough to know if you’re in financial trouble. So the idea is that if you are managing your finances responsibly, and you have good credit, and you know no late payments, or no accounts and collections on your credit report, that maybe you’re going to be a more responsible worker.

So, you know, again, not all employers are going to do this. But some, especially those in the financial industries, or maybe those that are considering you for a management or upper level position, may make a credit check part of their overall background, check that they do want you before hiring. So my point in telling you this is that credit affects many, many aspects of your financial life. And a lot of them you may not think about day to day. So how do you do it? How do you build credit? Well, the only way to build credit is to have active credit accounts in your name, not in your spouse’s name, but in your name, and use them responsibly over time.

What happens is all of your transaction data so you know, if you pay on time, if you pay late, all of that gets reported to at least one of the nationwide credit bureaus and they are Equifax, Experian, and TransUnion. The information in your credit files gets used by various credit scoring models to calculate your scores. And they’re actually hundreds of different credit scores, you do not have just one credit score, they’re all a little different. They all evaluate you differently and may even have different, like ranges for scores in terms of the numbers and some of them are even letters.

If you don’t have any credit data, or you don’t have good credit history, you could get denied for a loan denied for a credit card a benefit or a rental property, simply because you’ve got a thin credit file. In other words, having no credit is really the same as having bad credit because it doesn’t give a creditor or a merchant enough information to know if you would handle financial obligations responsibly. So you know, don’t think that oh, well, if I don’t have any credit accounts, I must have good credit. The opposite is true. If you don’t have any credit accounts, you’ve got a thin credit file and you’ve got bad credit, because in a lot of cases, there isn’t even enough information in your credit file for a credit scoring model to calculate a score for you.

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Okay, now that you understand some of the ways that credit helps or hurts your financial life, let’s talk about how all of this relates to canceling credit cards. One of the most significant factors in calculating credit scores is how much debt you owe, including a variable called your credit utilization ratio.

This is a formula that compares your debt on revolving accounts. Those are credit cards, retail cards and lines of credit, compares the debt on those revolving accounts to your available credit limits on those accounts. And the lower your utilization ratio, the better however, you don’t want zero utilization, you need to be using credit, but you just want to be using, you know a reasonable portion of your available credit.

So here’s how you could figure your utilization ratio, you would add up your revolving debt balances and divide that number by the total of all of your credit limits on those accounts. And if you have an employer issued credit card, maybe you’re somebody that like travels for work and you use a corporate card, a lot of people are surprised that those cards actually get reported to your credit file because they’re in your name. So don’t forget to include the balances that you’ve got on those employer issued cards. And if you want to double check all of this and just you know, kind of see what accounts are in your name, how much you owe and your credit limits, it’s really easy to do that by pulling your credit report. And you can get free copies and your free credit scores for some of your scores at sites including Credit Karma and credit sesame.

So let me give you an example. Let’s say you’ve got two credit cards, and each of them have a credit limit of $1,000. For one card, you let’s say you owe $500. And on the other card you owe zero, you’ve paid it off, your utilization ratio would be calculated by taking $500 Your total debt and dividing it by your total credit limit, which is $2,000. Remember, you’ve got 1000 on each card. So 500 divided by 2000 is 25%. Now, that’s a pretty good ratio, you want to make a goal to keep your credit utilization below about 20 to 25% of your available credit limit.

When you go higher than that you’re going to find out that your credit scores will go down. So when your credit utilization goes up, you appear to be a greater credit risk. And that’s why your credit scores go down.

The idea is that if you can’t pay down your balances, you know, maybe you’re spending too much or maybe you’re in financial trouble and you could be getting close to defaulting on your debts. So getting back to the example let’s let’s consider what would happen if you cancel the card that has a $0 balance and it also has $1,000 credit limit. Maybe you want to close the card because you’re just not using it maybe you know you finally pay it off, you don’t want the temptation to spend it or you’re like

Caitlin, and you just don’t like the particular card features anymore. So let’s say you cancel the card, once you do that, your utilization ratio drops significantly, because all of a sudden, your available credit limit got cut from 2000, down to 1000. Now your utilization ratio math is totally different.

Now it’s $500 of debt divided by $1,000 of available credit, which is 50%. So even though you’ve got the same amount of debt, your utilization ratio skyrocketed from 25% to 50%. Like it or not closing the card made, you appear less credit worthy, and your credit scores plummet. So just to review, canceling a credit card hurts your credit, because it instantly lowers your available credit limit, spiking your utilization ratio.

And for many of you, you may think, well, it doesn’t really, you know, that doesn’t matter. I’m not that interested in my credit. But again, you know, for all the reasons that I mentioned earlier, your credit is going to affect you know, a lot of things that you may not realize as you know, the quotes that you get for insurance, whether you get approved for certain accounts, whether you know, have a high-security deposit or a low-security deposit. And I will say that closing a credit card is most detrimental to your finances. When you plan to buy something expensive pretty soon like a home or a car, jeopardizing your credit could ruin your ability to get a competitive, low rate interest on a loan and cause you to overpay interest for decades. So while there’s no way to avoid some negative credit consequences, when you close a credit card, you know, there may still be a good reason to do it.

For instance, I don’t recommend that you have any credit accounts that tempt you to overspend, or that tempts you to make impulse purchases, taking a temporary hit to your credit might be well worth it to prevent more significant problems in your financial life. So again, I just want to reiterate the fact I’m not saying that you should never ever close a credit card. But what I am saying is that you should do it thoughtfully, and strategically.

So I’m going to go through some scenarios, I’m actually going to give you some questions that you want to ask, before you cancel a credit card, we’ll go through five of them.

The first is will I need new credit soon. So as I mentioned, if you’re planning to buy a home or finance a vehicle or make any other big purchase in your life, within the next three to 12 months, I don’t recommend closing a credit card, I recommend that you don’t take any chances with your credit.

If you do something that causes your utilization ratio to increase, and your credit score’s dive, you could be turned down for credit or even offered an expensive product. So you don’t want to do that. So again, if you’re thinking about doing something within I’d say, three to 12 months, just you know hold off on making any changes to your credit card portfolio.

The second question to ask is, what’s the card credit limit. So the card that you’re thinking about closing, you know, what is the limit is a 500 is at 5000. The lower cards available credit limit, the less it could negatively affect your credit when cancelled. So Caitlin did not mention the limit on her card. But I would say in general, if it’s more than $1,000, I would lean toward keeping it rather than closing it.

Now, Caitlin also mentioned that she was considering requesting a credit limit increase on another card that she has to offset that cancellation, Caitlin, that’s a great strategy to ensure that you don’t hurt your credit. And it’s also a great strategy. Even if you’re not planning to cancel a card, the more you can increase your credit limit on cards, the better your utilization will be. So it kind of works the opposite way.

If you increase your credit limit, your utilization will instantly go down. And that can help improve your credit. And remember, just because you increase the credit limit on a card doesn’t mean you’re going to spend it so you know it’s not necessarily something that you’re going to take advantage of.

But I would make sure that a credit limit is in place that it’s successful before you move forward, canceling another credit card. Okay, the third question to ask is How long have I owned the credit card? So in addition to making payments on time and keeping a low credit utilization ratio, the length of time that you’ve had accounts In Your name is an important credit scoring factor. Having a long rich credit file, boost your scores, and it makes you appear less risky to creditors.

This is one reason why it takes time for young people to build credit it, there’s kind of a ramping-up period, when young people get brand new credit accounts and even though they’re handling them really well, their credit may not be great, because time is just one factor in your credit score, the longer you own accounts, you know, the less of a risk you appear. One thing that I want to make sure you understand is that closing a credit card, or any account does not make it disappear from your credit history. So some people will say, Well, Laura, I had some late payments, you know, a few years ago, so I’m going to pay down this card and cancel it. And the problem is the account does not go away, the account is going to stay on your credit file for a predetermined amount of time, you can’t make it go away.

So never cancel a paid off card that’s got any negative information like you know, late payments or being in collections, thinking that it’s just going to make it go away. Credit counts stay in your credit files for 10 years, unless they contain negative information like late payments. And that case, you get a break because the account will only stay in your file for seven years. Once that 10 Or seven year period expires, a closed or paid off account will fall off of your credit reports.

But the problem with that is it may cause your average length of credit history to decrease once that that account that you’ve had a long time is no longer there anymore. Therefore, it’s better to keep a card that you’ve owned for many years open, especially if it’s got that positive credit history because you’re going to have it there for 10 years. A common question I get about closing a credit card is Laura, what do I do if I got pressured into opening a credit card at a retail store? Maybe the sales clerk just made some big discount seem just too tempting and too good to pass up. And so you signed up for something and maybe you didn’t even realize that you were signing up for a credit card. Let’s say this happens, you know, maybe you’re loyal to that store, and you do make frequent purchases there.

In that case, having a branded credit card might save you money, you know, it could make it worthwhile. And again, you cannot erase that card from your history. If you open the card, even by mistake, it is on your credit history. And it’s going to be there either for the seven years or the 10 years depending on whether you’ve got good or negative information. Now, if you’d rather not have a card that you opened by mistake, closing it sooner rather than later, it’s going to be better for your credit.

You know, if you opened a card on a Saturday when you were shopping and then you know week later, you realize oh my gosh, like you know, I’ve got a brand new credit card in my name. If you cancel it right away. You know, that’s, that’s probably a wise thing to do.

Okay, the fourth question to ask before canceling a credit card is, how many credit cards do I have? If you’re someone who’s got lots of credit cards, closing one with a low credit limit that you haven’t owned very long, it’s not going to hurt your credit too much. However, I would say if you’re wanting to close multiple cards, please space those out, let’s say make a cancellation every six months or even one every year.

I say that because another credit scoring factor is whether you have a mix of credit types, such as revolving credit and installment loans, creditors do want to know that you can handle these different types of credit. So if you’ve only got one credit card, it’s best to keep it you need at least one credit card in good standing. And some credit experts even recommend having several cards from different issuers like American Express, Discover, MasterCard, Visa, etc.

For optimal credit. Another tip is that credit scoring models calculate your utilization ratio for each of your individual revolving accounts. And then they also calculate it collectively on all of your accounts. So it is better to spread out your balances on multiple credit cards and maintain low utilization ratios on each card than it is to max out one card. So that’s another reason why I say you know you need at least one car but really you probably need two or three. I did a podcast called How many credit cards should you have for good credit, where I cover what you should know about what is the right right number of credit cards for you.

If that’s of interest, I would go back and listen to podcast number 660. And number five, the last question to ask before canceling a card is, what is the card cost. If you’ve got a card that charges an annual fee, you might be itching to close it. However, if it’s a rewards card, consider if you could be getting more from the card, you know, maybe you’re not taking advantage of all the cashback the miles or points. Sometimes those potential rewards are worth a lot more than the fee if you use the card wisely.

However, if you can’t afford the annual fee, or you just you know, flat out know that you’re not going to use a particular rewards card to your advantage, you may want to close it strategically using all the tips that I’ve provided here. And I would consider getting an offsetting credit limit increase on another card that you’ve got or even applying for a new card that you would use to avoid damage to your credit, again, you want to like get that new card first and then close the old card to make sure that your your credit limit is not decreasing.

It’s either staying the same or increasing. If you or Caitlin goes through all of these scenarios and considerations and you decide to keep a car that you don’t like or you’re you don’t use it very often, it’s best not to ignore that card completely. And I say that because if you don’t use a credit card for an extended period, issuers have been known to decrease your credit limit, or even to inactivate the card. Remember, they’re only making money when you’re using the card. So I would consider using all of your cards to make small purchases at least a few times a year, just to ensure that it stays active, that’s gonna allow you to continue adding positive information to your credit history. Caitlin, thanks again for your question. And I hope this has been helpful to all of you who are thinking about closing a credit card or are just curious about ways to make sure that you build and maintain great credit. If you have not yet joined my free private Facebook group called dominate your dollars.

What are you waiting for? It is an amazing group of people who are asking great questions, helping other people reaching their financial goals. All you have to do is search for the group on Facebook, or text the word dollars, d o l l a r s to the number 33444. And I’ll send you a direct invitation to the group. I hope to see you there. And you can also visit Laura D adams.com, where you’ll find my contact page and more about me my books and online courses.

That’s all for now. I’ll talk to you next week. Until then, here’s to living a richer life. Money girl is a quick and dirty tips podcast. It’s audio engineered by Steve Ricky Berg with editing by Adam Cecil. Our operations and Editorial Manager is Michelle Margulis. Our assistant manager is Emily Miller and our marketing and publicity assistant is Davina Tomlin.

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Kaitlyn O. says, “I’m a big fan of the Money Girl podcast and have been listening for years! A while ago, I racked up substantial credit card debt. So, I opened a balance transfer credit card and worked hard to pay it all off within the 0% APR period, which worked out great.

However, now I’m stuck with a super basic credit card that doesn’t offer any rewards. While I don’t want to waste time with this card, I’m also really nervous about closing it and messing up my credit score. I’m thinking about closing it and requesting a credit limit increase on another card I have that pays rewards. What do you think about that strategy?”

Thanks so much for your question, Kaitlyn! As you mentioned, managing credit cards properly is an essential part of building excellent credit. Many people mistakenly believe that closing credit cards automatically improves their credit. But the opposite is true because canceling credit accounts can instantly damage your credit.

But that doesn’t mean it’s never a good idea to close a card. This post will review what you should consider before canceling a credit account, how to minimize hits to your credit, and tips for closing credit cards strategically.

Why having good credit matters

Before we get into the pros and cons of canceling credit cards, let’s take a step back and review why having good credit matters in the first place. Many people don’t understand that credit affects multiple aspects of your financial life. Please don’t listen to anyone who tells you that credit doesn’t matter.

Most people know that having good credit allows you to get the most competitive interest rates and terms on credit accounts, such as credit cards, mortgages, car loans, and personal loans. For example, paying 1% less for a 30-year, fixed-rate mortgage could save you over $100,000 in interest, depending on the total amount borrowed and how long you own the home.

However, even if you never borrow money to finance a home or car, or you choose not to use credit cards, having good credit improves your finances in the following ways:

•    Reducing your auto insurance premiums (in most states)

•    Reducing your home insurance premiums (in most states)

•    Offering more rental housing opportunities

•    Cutting required security deposits on utility accounts

•    Making you eligible for more government benefits

•    Making you more attractive to potential employers that check credit (in most states)

The only way to build credit is to have active credit accounts in your name and use them responsibly over time. Your transaction data typically gets reported to at least one of the three nationwide credit bureaus: EquifaxExperian, and TransUnion. The information in your credit files gets used by various credit scoring models to calculate your scores.

If you don’t have any credit data or good credit history, you could get denied a loan, credit card, benefit, or rental because you have a “thin” credit file. In other words, having no credit is the same as having bad credit because it doesn’t give a creditor or merchant enough information to know if you handle financial obligations responsibly.

How canceling a credit card hurts your credit

Now that you understand some of the ways credit helps or hurts your financial life, let’s talk about how it relates to canceling credit cards.

One of the most significant factors in calculating credit scores is how much debt you owe, including a variable called your credit utilization ratio. It’s a formula that compares your debt on revolving accounts, such as credit cards, retail cards, and other lines of credit, to your available credit limits on those accounts. And the lower your utilization rate, the better.

Here’s how to figure your utilization ratio: Add up your revolving debt balances and divide that number by the total of all your credit limits. Don’t forget to include balances you have on any employer-issued credit cards in your name because they also get reported to your credit files.

To double-check what accounts are in your name, how much you owe, and your credit limits, look at your credit reports. You can get free report copies and scores at sites such as Credit Karma and Credit Sesame.

Let’s say you have two credit cards that each have credit limits of $1,000. If you owe $500 on one card and $0 on the other, your utilization would be $500 divided by $2,000, or 25%, which is a good ratio. Make a goal to keep your credit utilization below 20% to 25%.

When your credit utilization goes up, you appear to be a greater credit risk, which causes your credit scores to go down. The idea is that if you can’t pay down your balances, you must be spending too much and may even be close to defaulting on your debts.

Getting back to my example, consider what happens if you cancel the card with a $0 balance and a $1,000 credit limit. You might want to close the card because you’re not using it, you finally paid it off, you don’t want the temptation to use it, or you’re like Kaitlyn and don’t like a particular card anymore. Once you cancel the card, your utilization ratio drops significantly because your available credit limit gets cut from $2,000 to $1,000.

Now, your revised utilization ratio math is $500 divided by $1,000, or 50%. Even though you have the same amount of debt, your utilization ratio skyrocketed from 25% to 50%. Like it or not, closing the card makes you appear less credit-worthy, and your credit scores plummet.

So, canceling a credit card hurts your credit because it instantly lowers your available credit limit, spiking your utilization ratio. Closing a card is most detrimental to your finances when you plan to buy something expensive, such as a home or car, soon. Jeopardizing your credit could ruin your ability to get a competitive, low-rate loan and cause you to overpay interest for decades.

When canceling a credit card is a good idea

While there’s no way to avoid some negative credit consequences when you close a credit card, there still may be a good reason to do it. For instance, I don’t recommend you have any credit accounts that tempt you to overspend or make impulse purchases. Taking a temporary hit to your credit might be well worth it to prevent more significant problems in your financial life.

Before closing a card, consider the answers to the following five questions:

1. Will I need new credit soon?

As I mentioned, if you’re planning to buy a home or finance a vehicle or other big purchase in the next 3 to 12 months, I don’t recommend closing a credit card. If your utilization ratio increases and your credit scores dive, you could be turned down or offered an expensive loan.

2. What’s the card’s credit limit?

The lower a card’s available credit limit, the less it could negatively affect your credit when canceled. For instance, Kaitlyn didn’t mention the limit on her card, but if it’s more than $1,000, I’d lean toward keeping it rather than closing it.

Kaitlyn mentioned simultaneously requesting a credit limit increase on another card to offset a cancelation. That’s a great strategy to ensure you don’t hurt your credit or boost it if you keep all your accounts in place. I’d make sure a credit limit increase is successful before moving forward with account closure.

3. How long have I owned the card?

In addition to making payments on time and keeping a low credit utilization ratio, the length of time you’ve had accounts in your name is an important credit scoring factor. Having a long, rich credit file boosts your scores and makes you appear less risky to potential creditors. That’s one reason why it takes time for young people to build credit.

Credit accounts remain in your credit files for 10 years—unless they contain negative information, such as late payments. Any credit accounts with black marks only stay on your credit history for 7 years.

Once the 10- or 7-year period expires, a closed or paid-off account will fall off your credit reports. But that may cause your average length of credit history to decrease. Therefore, it’s better to keep a card you’ve owned for many years open, especially if it has a positive credit history.

A common dilemma is what to do after opening a card you got pressured into at a retail store. Sometimes salesclerks make getting a considerable discount with a new card signup sound too good to pass up. In some cases, you may not even realize that you’re signing up for a credit card.

If you’re loyal to a store and make frequent purchases there, having its branded credit card could save money, making it worthwhile. While you can’t erase a card that you opened by mistake from your credit history, if you’d rather not have it, closing it sooner rather than later is better for your credit.

4. How many credit cards do I have?

If you have lots of credit cards, closing one with a low credit limit that you haven’t owned very long won’t hurt your credit too much. However, if you want to close multiple cards, it’s best to space out cancellations every 6 months.

Another credit scoring factor is whether you have a mix of credit types, such as revolving credit and installment loans. Creditors want to know that you can handle different types of credit.

So, if you only have one credit card, it’s best to keep it. You need at least one credit card in good standing. Some experts even recommend having several cards from different issuers, such as American Express, Discover, Mastercard, and Visa, for optimal credit.

Another tip is that most credit scoring models calculate your utilization ratio for each of your revolving accounts and collectively on all your accounts. So, it’s better to spread out your balances on multiple cards and maintain low utilization on each card than to max out one card.

5. What does the card cost?

If you have a card that charges an annual fee, you might be itching to close it. However, if it’s a rewards card, consider if you could be getting more from it, such as cash back, airline miles, or points for merchandise. Sometimes the potential rewards are worth much more than the fee if used wisely.

However, if you can’t afford the annual fee or know that you won’t use a rewards card to your advantage, you may want to close it strategically, using the tips provided here. Consider getting an offsetting credit limit increase on another card or applying for a new card that you would use to avoid damage to your credit.

How to manage unused credit cards

If you or Kaitlyn decide to keep a card that you don’t like or use very often, it’s best not to ignore it completely. If you don’t use a card for an extended period, an issuer may decrease your credit limit or inactivate the account. So, consider using it to make a small purchase at least a few times a year to ensure it stays active. That allows you to continue adding positive information to your credit history.

This article originally appeared on Quick and Dirty Tips.

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About the Author

Laura Adams, Quick and Dirty Tips

Laura Adams, Quick and Dirty Tips

Laura Adams is an award-winning author of multiple books, including Money Girl’s Smart Moves to Grow Rich. Her newest title, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, is an Amazon No. 1 New Release. Laura’s been the writer and host of the popular Money Girl Podcast, a top weekly audio show in Apple Podcasts, since 2008. She’s a frequent source for the national media and has been featured on most major news outlets including NBC, CBS, ABC FOX, Bloomberg, NPR, The New York Times, The Wall Street Journal, The Washington Post, Money, Time, Kiplinger’s, USA Today, U.S News, Huffington Post, Marketplace, Forbes, Fortune, Consumer Reports, MSN, and many other radio, print, and online publications. Millions of readers and listeners benefit from her practical financial advice. Her mission is to empower consumers to live richer lives through her podcasting, speaking, spokesperson, teaching, and advocacy work. Laura received an MBA from the University of Florida. Visit LauraDAdams.com to learn more and connect with her.

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