Unused credit cards

twhatmough

I thought I read somewhere that one should never cancel unused credit cards, and I have a few that I have not used for years.

Should I cancel them or not?

PNPSUKNET

I would close all but one, keep the highest limit and pay general bills with it and pay off in full every month. They will report at the moment as dormant.

Moggles_2

The national average is five, so if you have five credit cards or fewer and none is maxed out, it's unlikely your credit rating would be harmed by keeping these cards, unless you have a lower than average annual income.

That said, with each successful credit card application, your available credit will increase in relation to your income and there will come a point when you must consider closure.

I think you have to treat each credit card on its own merits. IME, some card companies (eg. Barclaycard, MBNA) have regular, existing-customer offers and MBNA will even waive BT fees sometimes, if you're prepared to negotiate over the phone. Others (eg. HBOS, HSBC) reserve their best deals for new applicants.

In general, unless a credit card has a particular benefit (such as zero commission on foreign transactions), then I would cancel.

Firstly, having the credit available to you, even if not utilised, can put off potential lenders and secondly, by cancelling a card you can re-apply to that provider as a 'new' customer and take advantage of any introductory deals on offer.

Another good reason for phoning customer services to cancel an unused card is that occasionally you're offered an incentive to stay

Moggles_2

P.S. Some lenders will not consider applications from former cardholders for various periods following closure. Others accept applicants straight away.

In all cases, it's advisable to check your credit reports to make certain the account is actually closed down and marked "settled" before you re-apply.