Should I Cancel a Credit Card? Your Questions Answered!


It’s a question I get asked more than almost any other:

Should I cancel a credit card?

There are a lot of questions, rumors, and misinformation surrounding when, and if, you should cancel a credit card.

And unfortunately, many people do the wrong thing!

The answer, of course, isn’t cut and dry, and so I’ve broken down the main question in to a few smaller ones to make it easier to figure out whether you should cancel a credit card or not.

When I want to open a new credit card, should I cancel an old one?

No.  Most people wrongfully assume that when they are looking to open a new credit card that they should close their old ones.

In fact, closing one or more of your old ones before opening a new might actually hurt your chances at getting a new credit card.

Keeping older credit cards open actually helps your credit score stay high.  It keeps your average length of accounts high and it also gives you more available credit.

So unless you have another reason to close your credit card, you should NOT close it when looking to get a new one.

Which credit cards should I keep open?

Each person will have a different situation, but there are a few factors everyone should consider to determine whether they should cancel a credit card or not.

I will ALWAYS keep a card open if it meets any of the three criteria:

1.  The card has no annual fee.

If a card has no annual fee, then there is absolutely no reason to cancel it.  You are not paying to have it, so you might as well keep it open and let it help keep your credit score high.

This is why cards like the Chase Freedom, American Express Hilton Hhonors, and Citi Hilton Hhonors are such great cards.  Get them, get the sign up bonus, and keep them open forever.

2.  The card offers an anniversary bonus.

An anniversary bonus is when you get a reward each year for paying the annual fee.

Usually, the reward is enough to negate the annual fee, which basically makes it a fee-free card as long as you use the bonus.

And sometimes, the anniversary bonus is worth much more than the annual fee!

For example, the Chase Marriott has a fee of $85 but gives you a free night in a category 1-5 hotel each year.  I just used my free night to stay at the JW Marriott Shanghai, which normally would cost me $237!

The card that offers probably the best anniversary bonus is the Chase IHG hotel card.  For a $49 annual fee, you get a free night at ANY Intercontinental hotel.

This includes an overwater bungalow at the Intercontinental Bora Bora, which would normally run $860!

Many hotel cards offer an anniversary bonus, and so do some bank cards and/or airline credit cards.

Bottom line:  if a card offers an anniversary bonus, it’s best to keep it open.

3.  If it’s an “everyday” card for you.

Some points and miles are better than others (read my breakdown of which ones are best), which means that cards that earn those better points are the cards you should be using for your everyday expenses.

For example, my favorite points are Chase points and SPG points (which transfer to AA miles).  Therefore, I’ll use the Chase Sapphire Preferred and the Chase Ink Plus, both of which earn Chase points, for my everyday spending.

Then, when I need AA miles, I’ll use my SPG card.

Even though all of these cards have an annual fee and none offer an anniversary bonus, I still keep them all open.

That’s because they allow me to earn the points I want to earn for my everyday spending.

These are the only 3 cards that I keep open as my everyday spend cards.

How many cards should I keep open and how many should I close?

You should always keep at least a 50-50 split between cards you keep open and cards you close.  For example, if you’ve applied for 6 credit cards over the last year or two, you should keep at least 3 of them open.

A 50-50 split will help keep your credit score stable.

Of course, the higher the percentage of cards you keep open, the better, but make sure it’s at least 50%.

Should I cancel a credit card after I receive the sign up bonus?

No, no, no, no, no.

If you sign up for a credit card, make the minimum spend, and get the sign up bonus, you should NEVER cancel it right after that.

If you cancel a credit card only a few months after you get it, you’ll not only be hurting your credit score but you could also potentially get yourself noticed by the banks.

If they notice you doing this, they may blacklist you and not allow you to get any more of the products.

Ok, so when should I cancel a credit card?

If you’ve asked yourself the questions above and come to the conclusion that you should cancel your credit card, then you have to make sure you get the timing right.

For each card, you’ve either had the annual fee for the first year waived or you’ve paid the annual fee for the first year.

This means that it makes no sense whatsoever to cancel a credit card before the annual fee comes up again 12 months later.

If you are going to cancel a credit card, hold on to it for at least a year.  This will help your average age of credit, which means you’ll keep your credit score high.

Then, cancel the credit card when the annual fee comes due, 12 months after you first opened it.

Will I lose my points or miles after I cancel a credit card?

Ah, I knew you’d be asking that!

And that’s why I wrote a separate post on this exact subject.

The answer depends on what type of card it is, so make sure to read this post before you cancel:

Will I Lose My Points If I Cancel A Credit Card?

What if I don’t want to cancel a credit card but I also don’t want to pay the annual fee?

If you are looking to keep more credit cards open to keep your credit score high (remember, keep at least 50% open), then you can do two things:

1.  Ask to downgrade your card to a no-fee card.

Many of the best travel cards have “lower versions” that have no annual fee attached to them.

An example of this is the Chase Sapphire Preferred and the Chase Sapphire.  If you don’t want to pay the annual fee for the Chase Sapphire Preferred, you can downgrade to the Chase Sapphire.

The good part of this is that it keeps your original account open and helps your credit score.

The one thing to be careful of is that sometimes the lower version of the card has different terms and conditions.  

For example, the Chase Sapphire Preferred has no foreign transaction fees, gives you 2x on travel, and earns you “premium” Chase points, which can be transferred to partners.

By switching to the Chase Sapphire, you’ll lose those perks (see the side by side comparison here), including the ability to transfer to partners.

For more information on “premium” vs. “limited” Chase points, check out this article.

Downgrading is a great option, but always make sure you aren’t losing out on a perk that you value over the annual fee.

2.  Asking for a retention bonus

Sometimes, when you call in to cancel a credit card, you’ll be transferred to a specialist.  The job of that specialist is to get you to not cancel the card.

In order to get you not to cancel the credit card, they may offer you bonuses, such as statement credits or free miles.

If the offer is good enough to negate the annual fee, then I definitely suggest keeping the card open.  The more open cards, the better.

If it isn’t, then decide whether you want to keep the card open or not.

But I’d never cancel a credit card without at least asking!

Final Word(s)

Overall, it’s better to keep as many credit cards open as possible, as this will keep your credit score high.  And always make sure to keep at least 50% of your cards open.

If a card has no annual fee or an anniversary bonus, definitely keep it open.

If it’s a great overall card, like the Chase Sapphire Preferred or the American Express SPG card, then you may also want to keep it open.

If you do decide to cancel a credit card, NEVER do it until the annual fee becomes due a year after you opened it.

By following these simple rules, you should be able to keep your credit score high, stay in good rapport with the banks, and minimize the amount of annual fees you are paying!

What is your best advice for canceling a credit card?  How do you determine which cards to keep open?

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Author: Trav

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  • Keeping older credit cards open actually helps your credit score stay high.

    So does it follow if you cancel a credit card less than your average that your average goes up? Is is the average of all open cards or all cards reported?

    If all reported, how long do closed cards stay in the calculation.

    • @Carl P.- Interesting question. I believe the average is for all cards reported, and that the closed cards will stay in the calculation indefinitely. I’m not 100% sure on that, but I’ve seen credit reports of people who have closed credit cards and had them still on their report years later. If someone could weigh in and tell us more definitely, that’d be great!

  • What you don’t factor in is that the sooner you cancel a card, the sooner you can reapply to get the signup bonus again

    • @Cogswell- That’s true, but most companies now won’t let you get the sign up bonus again for a card. Amex used to, but they seem to cutting that cord, Chase has never really let you. Barclays lets you, and it doesn’t seem whether you have a card open or not. So you are right, that could be a factor, but I’d consider it a very minor one nowadays since the credit card companies rarely let you get the bonuses again, and if they do, you can get them whether you have a card open or not.

      • I have consistently received sign up bonuses for the same cards. I do always wait at least a year plus a few months minimum before reapplying for a card I previous canceled. I have received the Chase United bonus at least 3 times, AMEX Delta a few times, and Citi American a few times. Some tips for doing this though: (1) I never, ever, ever tell the credit card company I have done this, (2) try to wait as long as possible by first going after a business card or a card in your spouse’s name before going back to the original card you held in your name, (3) I try to “sprinkle” in new info on the app every time (e.g. using a different email, abbreviating vs spelling out words in my home address, using my first and middle initial vs my first name, etc.), I know it is still my same soch every time, but until this system stops working I’m going to keep doing it the same way. Love the website! Cheers.

        • @M L R- Some great advice, and interesting that you were able to get some of those cards a few times, especially the Chase United. I’m at the point where I have to go for some cards a second or third time, so I’ll take some of your advice and try to change things around a little bit. Thanks for the heads up!

  • Nice post, this has always been my question. I have not start my app-o-rama game yet. But would too many closed accounts hurt your credit when applying mortgage when buying a house? Let’s say I have a plan to buy a house in 10 years, I will start app-o-rama now and stop after 7 years, in the meantime may have many closed accounts. At year 10 applying for the mortgage, my score maybe excellent at the time, do you think I can still get a good mortgage interest rate at that time, will the lenders see that I have so many closed accounts and consider me high risk? Appreciate your input!

    • @Shawn- I don’t think it’d be that much of a factor. After 10 years or so, you’re credit history will be so much different than it is now, and the major factors would be paying off your credit cards and earning good credit that way.

      So yes, you’ll have some closed accounts on there, but as long as you keep a 50-50 split, your credit 10 years from now will be much higher than it is now.

      • I’d add if you’re looking to apply for a mortgage in the next year (vs 10), you may want to wait on the app-o-rama until after you close the loan…

        • @M L R- Totally agree. I wouldn’t go too crazy if you are looking to get a mortgage soon. 1-2 cards is ok, but I wouldn’t risk going for anything more than 3.

  • I had heard something about Amex backdating the “open date” on a new card to match the “member since” date.

    Is this (still) true (if it was ever)?

    • @Carl P- Yes, this is true, and still true. That’s a really nice perk of Amex. If you got your first Amex in 2000, let’s say, then every Amex you open has a date of 2000. This will help your average age of accounts a ton. As far as I know, Amex is the only ones to do this, and I have no clue why, but it’s great!

  • My husband and I were just talking about this yesterday as we have a card we want to close. When you mention the 50/50 ratio, how long does that apply for? For example, we canceled a card 3 years ago, would that still be part of this ratio? How long does it take for the closed cards to no longer have a negative impact, or to no longer show up on your credit at all?

    • @Katie- To be honest, I’m not sure how long it takes closed cards to drop off your account. I’d love if someone else weighed in with a better answer though! To be safe, I usually look at about 3 years out. After it’s been closed for 3 years, I don’t typically count it in my calculations.

  • 7 years non bankruptcy (charge offs, delinquent, lawsuit)
    10 in bankruptcy..
    accounts you close yourself in good standing up to 10 years and accounts with positive feedback can last longer

  • I agree with Cogswell. I have cancelled US Airways and British Airways cards, waited months, and got them again. I canceled IHG VISA cards and, at once, got the Master Card versions for each of us to get another 81,000 points.

    • @Jerry Mandel- When a card switches from Visa to Mastercard or vice versa, you are right, you can get the bonus again. That’s a special circumstance that people should take in to account, for sure.

  • I’ve had a Southwest card for a few years and I didn’t mind paying the fee to get the points but I’m considering closing it and applying for a new one and new bonus. Any reason I shouldn’t do this?

    • @Steph- You’ll need to apply for the different version. There are 4 versions: Personal Plus, Personal Premier, Business Plus, Business Premier.

      You won’t be able to get the bonus again if you apply for the same type. Easiest way to know which one you have is that the Premier is $99 annual fee, Plus is $69.

      If I were you, I’d try to open the other one BEFORE closing the one you have. If they ask you why you need two, give them a reason like “well, I want the Premier because I want a card with no foreign exchange fees” or one of the other little differences between the two.

  • Funny how in US you have to have other credit cards to have a good credit score, in Germany it is exactly the other way around – it is better to not have any or a minimum of credit cards, you will probably get denied if you already have mutiple cards…

  • Thank you Trav, I was just getting ready to cancel 2 or 3 cards that I don’t really need anymore, and had no idea that could negatively affect my score. Intuitively I would have thought it would be the other way around, as in the case of Germany as Jana mentioned. Those 3 cards I would have cancelled have no annual fee, so I’m definitely going to keep them open now, and I wanted to say a big THANK YOU for your post. Really happy I saw this before cancelling them! :)


    • @Paul- Well, I’m super glad you found the post in time. Yeah, it seems counter-intuitive but it is one of the biggest mistakes people make. Just a quick question: How’d you find the post. Where you already a reader, or did you happen upon it through Google. Always curious.

      • Yeah for sure! Good question, I checked out your site for the first time a few days ago through hearing about you from Marcello at DTA and was like a kid in a candy store reading all of the awesome info. You inspired me to gather my random and forgotten award points from different places that I’d have never used, and one of them was a Marriott Rewards card. I was curious if they had any value, so I did a search in your search box for “Marriott”. I wasn’t even looking for the credit card cancellation post, but you talked about Marriott in there so it was the 3rd or 4th result! haha kind of a random way to find it I know, but I don’t believe in coincidences, it was perfectly timed! :)

        Having fun learning a lot from your site! Take care man, talk to you later!

        • @Paul Dennis- Hey, that’s a great story. We are redesigning the site to make it much easier to find stuff, but glad you were still able to find that post! Tell Marcello I said Hello!

  • So the ratio is 50-50 with all your cards opene or just the cards opened the year your closing… For instance in 2015 if I opened 2 cards, I should not close more than 1?

    • @Danielle- Yeah, I try to keep a ration of 50-50 for the new cards I’ve opened. So if I open 4 in 2014, I’ll close at most 2 when the annual fee comes due in 2015. Just a good rule of thumb.