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 into a few smaller ones to make it easier to figure out whether you should cancel a credit card or not.
How to Decide If You Should Keep a Credit Card 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 these 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 and American Express Hilton Honors are so great. Sign up for the cards, get the welcome offer/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 Marriott Bonvoy Boundless card has an annual fee but also gives you a free hotel night each year. I just used my free night to stay at the JW Marriott Shanghai, which normally would cost me $237 (way more than the annual fee I paid!).
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. You use the card for everyday spending
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 Marriott Bonvoy points (which transfer to American Airlines miles).
Therefore, I’ll use the Chase Sapphire Reserve for my everyday spending to get Chase points. Then, when I need American Airlines miles, I’ll use my Marriott Bonvoy card.
Even though all of these cards have an annual fee, I still keep them all open because they allow me to earn valuable points as part of my everyday spending.
Closing a Credit Card FAQ
Now that you understand how to decide when to keep a credit card open, let’s answer some common questions about closing credit cards.
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 cards before opening a new one might actually hurt your chances of getting a new credit card.
Keeping older credit cards open helps your credit score stay high. It keeps your average age of credit history 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.
How many credit cards should I keep open?
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?
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.
Will I lose my points or miles after I cancel a credit card?
One of the most important things to know before canceling a credit card is whether or not you’ll lose your points if you cancel.
There is a lot of confusion around whether your points are safe or not, and one of the worst things you can do is cancel a card, only to find out later that you’ve lost all your hard-earned points.
So how do you know if you’ll lose your points/miles? It all depends on the type of credit card you have.
Airline Credit Cards
Will I lose my points if I close an airline credit card? No.
These cards are specifically tied to a certain airline. The bank issues you the card and you receive the points with the airline it is co-branded with.
An example is the Chase Southwest Rapid Rewards Priority.
Chase is the bank that offers you the credit card. You apply for the card through Chase, you pay the bill to Chase, etc.
However, the rewards you earn are with Southwest Airlines.
Chase and Southwest Airlines are two separate entities. So even if you cancel your Chase credit card, you still get to keep the points in your Southwest Airlines account.
Hotel Credit Cards
Will I lose my points if I close a hotel credit card? No.
Hotel credit cards operate the same way as airline credit cards, and the result is the same.
You will NOT lose your points if you cancel a hotel credit card. For instance, if you get the Chase The World of Hyatt card, the points you earn are with Hyatt. Even if you close your Chase account, you’ll get to keep your Hyatt points.
Bank Reward Credit Cards
Will I lose my points if I close my bank reward credit card? Yes.
We’ve saved the bad news for last. Unfortunately, with bank reward credit cards, if you cancel the credit card, you WILL lose your points.
This is because the bank is the one who gives you the credit card AND the one you have points with. When you close the card, your account AND points go away.
Examples of bank reward credit cards include the Chase Sapphire Reserve, Amex Platinum, and Capital One Venture Rewards.
How to Avoid Paying Annual Fees
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. If you don’t want to pay the annual fee for the Chase Sapphire Preferred, you can downgrade to the Chase Freedom.
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 Chase Ultimate Rewards points, which can be transferred to partners.
By switching to the Chase Freedom, you’ll lose those perks. So before you downgrade a card, always make sure you aren’t losing perks that are worth more than the annual fee.
2. Ask 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.
To keep you from canceling the 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!
The Right Time to Close 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 waived for the first year or you’ve already paid the annual fee.
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.
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 an anniversary bonus or no annual fee, definitely keep it open.
If it’s a card that charges a fee but is useful to you overall, like the Chase Sapphire Preferred or the Marriott Bonvoy Boundless, 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 standing with the banks, and minimize the amount of annual fees you pay.
I have a chase business ink prefered card that has an anniversary coming up. I do not want to pay the renewal fee . I already have a house and car and my credit score is in the 800’s so I do not really care to keep the line open. Should I just close the card or do I risk getting banned by chase?
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.
Trav, I love your site! Do you have a way that you track your cards, the fees, etc? I would think that juggling 25+ cards would get confusing.
@Daniel – Glad you like it. Honestly, I just use a simple spreadsheet. Name of card, date I opened, date I closed it (if I did close it) and any notes on it. That’s all you really need to do. And then, I only use about 2-3 of them regularly, set them to autopay, and I’m good to go.
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!
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…
@Jana- Yeah, it is interesting how other countries value different things, huh?
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.
Thanks. I will try that.
Southwest will give you the bonus on the same card if you 1) close your current account and 2) have not received the bonus in the last 24 months.
@Brant- Yeah, that seems to do the trick. Not for everyone, but most people. Pretty cool!
So, how many open credit cards do you have right now? Between my hubs and I, we are right at 30!!! :-/
@Toni- Umm, around 20-25. Always fluctuating!
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.
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
@Jennifer Logan- Does it take 7 years for a regular closed card to fall off?
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.
My closed credit cards stayed on my credit reports for 11 years!
@Lidia – That definitely shouldn’t happen. I would call up the bureaus and get that removed.
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!
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.
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!
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!