Should I leave empty credit cards open?

Should You Keep Empty Credit Cards Open?

Maintaining open, unused credit cards might seem counterintuitive, but it can actually have significant benefits for your credit score. Here are some reasons why you may want to keep those empty cards active:

• Credit History Length: The length of your credit history is a significant factor in your credit score. Keeping unused cards open extends the average age of your accounts, which can boost your score over time.

• Credit Utilization Rate: Your credit utilization rate is the amount of credit you’re using compared to your total available credit. Keeping a low credit utilization rate is essential for a strong credit profile. By keeping an empty card open, you increase your total available credit, which lowers your utilization rate.

• Card Health: Unused credit cards can become inactive if they’re not used for a certain period. This can damage your credit score. To prevent this, consider setting up a small, automatic payment each month to maintain the card’s activity.

Exceptions to Consider:

While keeping unused credit cards open is generally beneficial, there are some exceptions to consider:

• Annual Fees: If the credit cards have high annual fees, it may not be worth it to keep them open.

• Debt Risk: If you have a history of overspending, keeping unused credit cards open could lead to debt.

• Identity Theft: If you’re concerned about identity theft, you may want to close unused credit cards to reduce your exposure.

Best Practices for Managing Unused Credit Cards:

• Set up a small, automatic payment each month.
• Check your credit report regularly to monitor the health of your unused cards.
• Limit the number of unused credit cards you keep open.
• Consider consolidating your unused cards into a single card with a lower interest rate.

Conclusion:

In general, maintaining open and unused credit cards can be beneficial for your credit score. However, it’s important to consider your individual circumstances and weigh the potential benefits against any potential drawbacks. By following these best practices, you can effectively manage your unused credit cards and improve your overall credit profile.