5 Signs You Should Cancel Your Credit Card (And When You Shouldn’t)

Are you thinking about canceling your credit card? I’d like you to please learn the five key signs indicating it’s time to cancel your credit card and when to keep it to maintain your credit score.

Do you think you should cancel it? Read This First

Canceling a credit card is a big financial decision. If you’re wondering whether to cancel your credit card, you need to consider both the benefits and the downsides. While the plastic offer convenience, rewards, and financial flexibility, it can also lead to debt and unnecessary expenses. Let’s break down the five main signs that tell you when it’s the right time to cancel it—and when it’s better to keep it.

1. The Annual Fee Isn’t Worth It

Some cards come with annual fees that can be quite expensive. If you’re not using the rewards, travel perks, or cashback offers that justify the cost, you might be wasting money.

When to Cancel:

• You don’t use the benefits enough to justify the fee.
• You found a no-fee one with similar rewards.
• You want to eliminate unnecessary expenses.

When to Keep It:

• You use the benefits often, and they outweigh the annual fee.
• Canceling the card could negatively affect your credit score.

2. Overspending

If you often find yourself overspending just because you have enough credit, it could be leading you into debt. Credit cards make it easy to buy now and pay later, but this habit can create financial stress.

When to Cancel:

• You max out regularly.
• You rely on credit to pay for everyday expenses.
• You only make the minimum payments, keeping you in debt.

When to Keep It:

• You have self-discipline and stick to your budget.
• You pay off the full balance each month, avoiding interest charges.

3. High-Interest Rate

High-interest can cost you a lot if you carry a balance. If you’re paying excessive interest on your purchases, you might want to consider canceling or switching to a lower-interest option.

When to Cancel:

• You found one with a much lower interest rate.
• You’re struggling to pay off your balance and need to cut expenses.

When to Keep It:

• You always pay the full balance, so the interest rate doesn’t affect you.
• Your card has a long credit history that helps boost your credit score.

4. You Never Use It

An unused credit card might seem harmless, but it could actually pose risks. If it has fees or if you’re worried about fraud, canceling might be the right decision.

When to Cancel:

• The card has an annual fee, and you don’t use it.
• You want to simplify your financial accounts.
• You’re concerned about identity theft and fraud risks.

When to Keep It:

• The card has no fees, and keeping it helps your credit utilization rate.
• It has a long history, which benefits your credit score.

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5. The Card Has Been Compromised

If you’ve been a victim of fraud or your card details have been stolen multiple times, you might consider canceling the card to prevent further security issues.

When to Cancel:

• Your card has been hacked more than once.
• Your card issuer doesn’t offer strong fraud protection.
• You want to switch to a provider with better security features.

When to Keep It:

• The fraud was a one-time issue, and your bank resolved it quickly.
• You trust your credit card provider’s security measures.

What Happens When You Cancel?

Canceling a credit card can impact your credit score in a few ways. It shortens your credit history and may increase your credit utilization ratio, both of which could lower your score. Before canceling, consider these points:

• Will closing the card affect your credit score?
• Do you have other credit cards to maintain a strong credit history?
• Can you switch to a no-fee version of the card instead?

If you decide to cancel your credit card, pay off any remaining balance first. Then, contact your card issuer to officially close the account. Monitor your credit report to ensure the account reflects as “closed by cardholder” to avoid any negative impact.

Canceling a credit card is a personal decision that depends on your financial situation. If your card is costing you money, leading you into debt, or putting you at risk for fraud, it might be time to let it go. On the other hand, if it’s helping you build credit and doesn’t cost you extra, keeping it open could be the smarter choice.

Thinking about canceling your credit card? Weigh the pros and cons before making a move. If you found this guide helpful, share it with a friend who might need it!