Canceling an unused credit card can make a lot of sense, especially if the card charges a membership fee or inactivity fee. Why pay for a service you don’t use?
However, keep in mind that closing any line of credit (including a credit card) can affect your credit score. The percentage of available debt that you use counts for 30% of your score. Canceling a credit card reduces the overall amount of credit you have available, meaning your other balances will now use a higher percentage of that credit. For example: John has two credit cards. Card A has a limit of $10,000, Card B $12,000. John’s balance on Card A is $5,000. He has no balance on Card B. John is currently using about 23% of his available credit card debt. If he cancels Card B, his available credit card debt will drop to $10,000. His $5,000 balance will then be 50% of his available debt.
