Think twice before canceling an old credit card

With all the negative press about credit cards and credit card debt, it's really tempting for most people to go through their wallet and start weeding out unused or high interest credit cards. But before you get out the scissors and pick up the phone to call the customer service number, consider a few things first.

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First and foremost, canceling a credit card that you have had for many years could actually hurt your credit score. That's right; it could actually shave precious points off that magical number that lenders use as a beacon when deciding whether to grant new credit and at what rate. Credit experts agree that canceling a "vintage" credit card that has provided an historical view of your spending and debt repayment behavior could be detrimental to a person's credit score.

Another factor to consider is why you chose that particular credit card as the one to cancel. Is it because of the interest rate? If so, you could call the issuer to request a more reasonable APR and threaten to cancel if they don't grant your request. Perhaps it's something more frivolous, like you don't like the way the card looks. If this is the case, many issuers can let you choose from among a number of new and exciting credit card designs that might entice you to pull it out of your wallet more often.

But more than likely, if you are like most people, the reason you choose to cancel a credit card is that you have simply stopped using it and it's collecting dust in some drawer. Even when this is the case, you should stop and think before pulling the trigger on canceling. It is far better to try and get that oldest credit card functioning at an acceptable level, either through renegotiating the rate, adding rewards or changing the design.

If none of these quick-fixes work in making that old plastic welcome again in your wallet, strongly consider throwing it back in that drawer to use as an emergency backup card. While it's bad to have too many credit cards in terms of credit scores, not having enough credit can really put you in a squeeze in an emergency.

This isn't to say that you shouldn't consider getting a new credit card from time to time. It's important in today's competitive credit card marketplace to take advantage of some the great 0 percent APR, cash back and reward credit card offers that are available. But in order to keep you credit rating as high as possible, you should be very reluctant to vote your oldest credit card off the island to make room for that shiny new model.

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Updated: 10-22-2018