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Navigating the topic of credit can be quite confusing, particularly when you've got a credit card that you're just not that into anymore.

Can you cancel it? Is it better to keep it? Will canceling it hurt your credit?

Let's sort this out.

Reasons to cancel

businessman with credit card dialing phone for  support
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If the card is too tempting or is costing you too much, go ahead and cancel.

If dumping a credit card might stop you from spending uncontrollably or allow you to avoid a hefty annual fee that you'd rather not pay, then canceling might not be a bad idea.

What many people don't know is that you can cancel a credit card even if it has a balance. Just contact the card issuer and ask that the account be closed so new charges can't be made. You'll be able to continue to pay the balance down.

To summarize: If the card is costing you money, cancel it!

Reasons not to cancel

But it typically makes the most credit sense to keep open any available line of credit, especially when you don't have a balance that's racking up interest.

You never know when you might need that credit, so hang onto it for a rainy day.

Plus, the unused credit can pad your credit score. Your score tends to be stronger when you have more untapped credit lines at your disposal.

Cancellation and credit scores

Fair credit score report with pen
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Canceling a credit card could drop your credit score into the so-so range.

Canceling a credit card can have different impacts on your credit score depending on your financial profile.

If you've already established substantial credit and handle your debts well, closing a card likely won't impact your score much, if at all, and certainly not for long.

But canceling a card with a high credit limit can hurt your credit score. To protect your score, you'd need to pay off other credit card balances — to offset the loss of available credit from the card you're losing.

It can be even more dangerous to your credit if you cancel a credit card you've had for years. Old credit is the best kind of credit, and having a long-standing, well-maintained line of credit looks excellent on a credit report.

So, what should you do?

If you're determined to banish a credit card from your wallet and think you have good reasons, the cancellation likely won't shatter your credit score.

That said, it's always best to preserve your credit lines, to maintain a high score and have credit options at your disposal.

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