Is it worth keeping credit cards you don't use?

The Hidden Benefits of Holding Onto Unused Credit Cards

In an era where digital wallets and contactless payments reign supreme, carrying a hefty stack of credit cards might seem outdated. However, there’s often a hidden value in keeping even those cards you rarely use.

Boosted Credit History Length

Your credit history is a chronological record of your borrowing and repayment habits. The length of your history plays a significant role in your credit score. By keeping unused credit cards open, you’re effectively extending the duration of your credit activity, ultimately boosting your score.

Reduced Credit Utilization Ratio

Your credit utilization ratio measures the amount of credit you’re using compared to your overall credit limits. This ratio is a key factor in determining your credit score. Even if you don’t use an unused credit card for purchases, it still contributes to your total available credit. This helps reduce your overall utilization ratio, which can lead to a higher credit score.

Convenience as a Backup

While you may not plan to use an unused credit card regularly, it can serve as a valuable backup in case of emergencies. Whether you lose your primary card or encounter an unexpected expense, having a spare line of credit can give you peace of mind.

Low Maintenance

Contrary to what you might think, maintaining unused credit cards is relatively effortless. Simply set up autopay for the minimum balance to avoid missing payments. Most credit card companies also have online portals where you can monitor your account activity and make any necessary adjustments.

Weigh the Pros and Cons

Of course, there are potential drawbacks to keeping unused credit cards. Some cards come with annual fees, so factor in the cost before deciding to hold onto them. Additionally, having too many open credit lines could potentially lead to more debt if you’re not disciplined with your spending.

Conclusion

While decluttering your wallet may seem appealing, there are substantial long-term advantages to keeping unused credit cards open. The benefits of an extended credit history, reduced credit utilization ratio, and backup convenience outweigh the potential minor inconveniences. Consider carefully before closing any unused credit cards, as they could be valuable assets in building and maintaining a strong credit score.