You might think your old, unused credit cards are harmless—just sitting in your drawer, collecting dust. But here’s the truth: those forgotten plastic pieces could be quietly sabotaging your finances. Whether it’s lowering your credit score, racking up hidden fees, or opening the door for fraud, unused credit cards can have a surprising impact on your financial health. Here’s why you should think twice before putting them away for good.
1. It Could Lower Your Credit Score
It’s a little-known fact, but keeping an unused credit card could actually hurt your credit score. Here’s how: Your credit score is partially determined by your credit utilization ratio, which is the percentage of available credit you’re using. If you close an unused account, you lower your total available credit. This increases your utilization rate, which can ding your score.
For example, if your total available credit is $10,000 and you’re only using $1,000, your utilization rate is a healthy 10%. But if you close a card with a $2,000 limit, your available credit drops to $8,000, and your utilization rate jumps to 12.5%. That extra 2.5% can hurt your credit—something to keep in mind before canceling that old card.
Pro Tip: Don’t cancel the card right away! Keeping it open and using it occasionally can help keep your credit utilization low and your score high.
2. It Could Come With Hidden Fees
Just because you’re not using an old credit card doesn’t mean you’re not getting charged for it. Some credit cards have annual fees that you’ll continue to pay even if the card is collecting dust in your drawer. Others charge inactivity fees if you haven’t used the card in a while.
And if you forget about the card completely? Late fees or interest charges could accumulate if you miss a payment. Suddenly, your old card isn’t such a harmless piece of plastic anymore.
Pro Tip: Review your credit card’s fee schedule regularly. If your old card is eating up your wallet with fees, you might want to think about downgrading or closing it.
3. It Could Be a Fraud Target
An unused card is an identity thief’s dream. If fraudsters get hold of your account info, they can start racking up charges without you even noticing. Many people forget about old accounts, leaving them open to abuse. With all the data breaches and online scams out there, it’s not hard for someone to gain access to your card details.
Just because you’re not using the card doesn’t mean it’s not at risk. A compromised card could lead to unwanted charges, and fixing the problem could be a headache that takes weeks to sort out.
Pro Tip: Keep tabs on your credit card statements, or better yet, set up alerts for any activity. If you’re not planning on using the card again, consider locking or freezing it to avoid fraud.
4. It Could Hurt Your Ability to Get New Credit
When applying for a new loan, credit card, or mortgage, lenders look at your credit report to assess your financial health. If they see you have multiple open accounts, even if you’re not using them, it can signal that you have too much credit available and could be a higher risk borrower.
Additionally, an unused card could affect your debt-to-income ratio, which is another factor lenders consider when you’re applying for larger loans. It might seem like a minor issue, but unused cards can make it harder to get approved for the credit you actually need.
Pro Tip: Before applying for new credit, review your credit report to make sure your unused cards aren’t getting in the way. Closing accounts strategically can help improve your chances for approval.
So What Should You Do With Your Unused Credit Card?
If you’ve got an old card gathering dust, here’s how you can manage it:
- Keep It Open and Use It Occasionally: If it doesn’t have a high annual fee, use it every few months to keep it active. This will help you maintain a low credit utilization rate and keep your credit score in good shape.
- Downgrade or Call Your Issuer: If the card is racking up fees, call the issuer and ask about downgrading to a no-fee version. Many cardholders don’t realize they can switch to a free, basic version without losing their account history.
- Close It Carefully: If you really don’t need the card anymore, consider closing it—but be mindful of the impact on your credit score. You might want to keep cards with long credit histories, as they’re valuable for your score. If you do close it, make sure there’s no outstanding balance first.
The Bottom Line: Don’t Ignore Your Old Cards
That unused credit card might seem like it’s harmless, but it could be quietly undermining your financial stability. Whether it’s hurting your credit score, racking up fees, or leaving you vulnerable to fraud, keeping those cards around might not be worth it. Take a close look at your credit card portfolio, and make sure you’re making the right choices for your wallet and your credit health.