We get asked this question a lot. And honestly, there is no cut and dry answer. Whether or not to cancel a credit card comes down to personal preference. Closing cards can hurt your credit score because you are decreasing the average lifetime of your cards. But, that doesn’t mean that you shouldn’t close cards that aren’t giving you benefits.
How to evaluate your credit cards
Each year, the RewardStock team takes inventory of the cards in our wallets. We weigh the value of the benefits of each card vs the annual fee to determine whether to keep or cancel a credit card. You should do this, too.
Let’s look at a real world example of this evaluation with the Chase Hyatt card. Keep in mind that everyone’s situation varies. This is just an example scenario.
The Chase Hyatt card has a $75 annual fee and comes with an annual free category 1-4 hotel night. These free nights can be used on hotels that price up to $350+ per night, so the $75 fee is outweighed by the benefit, if you plan on staying in a Hyatt property. Most people that are planning on staying in a Hyatt property that can use this benefit would say that the annual fee is clearly warranted.
This is just one example. It is important that you evaluate how important all of the card’s benefits are to you vs the annual fee.
We always recommend keeping cards with no annual fees open because they are helping your credit score and with no fee. It doesn’t cost you anything to have an open account that you don’t use.