Should you drop old credit cards?
RICHMOND, Va. (WWBT) - Experts always tell you to keep all your old credit cards open. Even if you’re not using them. But is there a time you should close them?
Having a credit card for a long time helps your credit score. Old credit cards, even with no balance on them, increase the average age of your accounts, which helps your credit score.
Sara Rathner, a personal finance expert with NerdWallet, says if you close an old card it could ding your score by a couple of points. That’s mainly because it lowers your total available credit limit.
Rathner says in general experts recommend not spending more than 30% of your total credit limit in a billing cycle. Even less than 10% is ideal. So, if your credit limit is suddenly lowered but your spending remains the same, it’s that much easier to overspend.
“That being said, if you don’t want to pay an annual fee on a card. if you’re not getting value out of it anymore. You want to make room in your life for a different credit card. you can consider closing the old card,” said Rathner.
Especially if you are getting charged an annual fee for a card you rarely use. If that’s the case, before you close it, call up the company and see if it can move you to a different card - with no fee.
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