Many people have at least one credit card lying unused in their wallet. It might be an old card, a backup card, or one that simply doesn’t fit your spending anymore. At some point, a common question comes up — should you close a credit card you don’t use?
The answer is not a simple yes or no. Closing an unused credit card can help in some cases, but it can also quietly harm your credit profile if done without understanding the impact.
Let’s break it down clearly.
Why People Think About Closing Unused Credit Cards
Most people consider closing cards for reasons like:
- Avoiding annual fees
- Reducing temptation to spend
- Simplifying finances
- Fear of misuse or fraud
All these concerns are valid. But the decision should depend on how the card affects your overall credit health.
Pros of Closing a Credit Card You Don’t Use
1. You Avoid Annual and Hidden Fees
If the card is not lifetime free, closing it saves:
- Annual or renewal fees
- GST on fees
- Charges linked to inactivity in some cases
This makes sense if the card provides no real value.
2. Lower Risk of Fraud
Unused cards can be forgotten. If card details leak or the card is misplaced, fraud can occur without immediate notice.
Closing the card removes this risk completely.
3. Better Financial Discipline
For some people, fewer cards mean:
- Less impulse spending
- Better tracking of expenses
- Clearer money habits
If a card tempts you unnecessarily, closing it can bring peace of mind.
Cons of Closing an Unused Credit Card
1. It Can Reduce Your Credit Score
Closing a credit card reduces your total available credit. This can increase your credit utilisation ratio, which is a major factor in your CIBIL score.
Higher utilisation = lower score.
2. It May Shorten Your Credit History
If the unused card is one of your oldest cards, closing it can reduce the average age of your credit accounts.
A shorter credit history can negatively impact your credit score.
3. Fewer Backup Options
Unused cards can still be useful:
- During emergencies
- If your primary card is blocked
- For travel or online purchases
Closing too many cards reduces flexibility.
When You SHOULD Close an Unused Credit Card
Closing the card makes sense if:
- The card has high annual fees with no benefits
- You already have multiple cards with high limits
- You struggle with overspending
- The card is rarely accepted or poorly serviced
In these cases, the benefits may outweigh the drawbacks.
When You Should NOT Close an Unused Credit Card
Keep the card if:
- It is lifetime free
- It is one of your oldest credit cards
- It has a decent credit limit
- Your overall credit utilisation is low
Instead of closing, you can keep it active by making a small transaction every few months.
Smarter Alternatives to Closing a Card
Before closing, consider:
- Asking the bank to convert it to lifetime free
- Requesting a lower credit limit
- Disabling online or international transactions
- Using it once every 6–12 months
These steps protect your credit score while reducing risk.
Closing a credit card you don’t use is not always a smart financial move. While it may reduce clutter and fees, it can quietly impact your credit score and future loan eligibility.
The smartest approach is to evaluate each card individually and make a decision based on fees, age, limit, and your spending behaviour.
Sometimes, keeping a card unused — but active — is better than closing it completely.
