3 Reasons Why I Keep a Credit Card I No Longer Use

It’s a good idea to review your financial accounts frequently and make sure they’re still working for you; This includes credit cards. Sometimes, if you haven’t used your card in a while, your card issuer may contact you to allow you to do so. I recently received an email from one of the organizations that holds my card, threatening to cancel it if I don’t use it within 30 days.

I want to keep this card, so I used it to buy myself a new set of coffee table coasters from Etsy and then paid the fee immediately to keep the account active. Frankly, I haven’t used the card for a long time. So why hide it? Here’s why.

Top-rated credit cards are easy to use and rewarding. Click here for a compiled list of the best credit cards.

1. A long credit history

The credit card I’m trying to keep is the oldest of my current cards. I opened it in the fall of 2011 and listed 13 years of history on my credit report. I have never had a late payment on this card, so it contributes to my excellent credit score.

Being stuck with an old credit card that you don’t use much is often a big hit to your credit score. Increases the average age of your credit history, which accounts for 15% of your FICO® Score; The longer you have the loan, the more evidence you can show the lender that you are a responsible borrower. time payments.

So unless your old credit card isn’t harming your finances (by encouraging you to overspend or charging an annual fee), consider sticking with it. Keeping this card does not cause any harm to my financial situation.

2. An affordable credit limit

When I first got approved for this old credit card, I didn’t have a very high credit limit; I don’t remember the details but it was maybe $1000. But over the years, the issuer has increased my credit limit many times, and now I’m up to an $8,700 credit limit — not bad.

Having additional credit also increases my credit score. It lowers my credit utilization ratio, which is the amount of credit I use in relation to how much access I have. Keeping this number low is one of the keys to good credit. Ideally, you should be using less than 30% of your available credit at any given time, and this factor accounts for 30% of your FICO® Score (easy to remember, right?).

I don’t have a balance on any of my credit cards these days, but my credit reports always say I have a balance on more than one card because card issuers report balances at different times throughout the month. Having $8,700 in credit that I’m not using serves to lower my credit utilization ratio, even if I have expenses from other cards at the time their balances are reported.

3. I may need this in the future

In the end, I decided to use this card because it might come in handy in the future. That $8,700 limit is pretty significant, and I can rely on this card if I need to finance a home repair, for example. One of its features is that the issuer regularly offers lower APR promotional periods; One of their current offers, for example, is 3.99% APR on new purchases.

This could save me a lot of money on a big bill — 3.99% is a lower interest rate than I’d get on a personal loan, and much lower than most credit cards’ regular APR. In case you’re wondering, as of August 2024, the average credit card interest rate across all accounts was 21.76%. A rate below 4% to finance a large acquisition is nothing to sneeze at.

Need to finance a big purchase? Click here for our picks for the best 0% intro APR credit cards.

I have no way of knowing what financial needs may arise for me in the future. Having a solid credit score will always benefit my bottom line, which is why I’m keeping this card. If you have an old card that has gathered dust, you may want to hang on to that as well.