Don’t cancel that credit card just yet.

If I could have it my way, I would only ever use 1 credit card for all my purchases.

Why? Because I’m someone who doesn’t like clutter…even though I’m human and fall victim to it time & again. It’s a mental load to me, knowing that I have multiple credit cards – all originally opened for different purposes – that don’t all get consistent action these days. And it’s a chore to go in and physically pay each bill. (Yes, I can automate this. But for reasons both valid and loopy, I refuse. Another post for another day.)

Maybe you’re the same way. Or maybe for you, having multiple credit cards is just too much temptation. That’s a far more reasonable excuse for wanting to close those accounts.

But as I made moves this morning to cancel one of my cards, I did a quick web search and soon realized that could be an annoying mistake.

All thanks to credit score math.

For those who may not know – your credit score is the entirety of your financial reputation, distilled down into a single, 3-digit number. It’s not a measure of our worth or value in this world by any means! And yet, it dictates our ‘credit worthiness’ and signals to financial institutions whether we’ll pay back the money they lend us for stuff.

Now, that number is based on many factors and changes over time. One of those factors? Average credit age: the length of time your credit accounts are active. The larger the age, the better the score.

Since credit age is an average of all your open credit accounts, this means that closing one – especially if it’s one of the longest-standing – can hurt your credit score, at least temporarily. Which is what I confirmed on Credit Karma’s website, and with the Chase bank rep I spoke to on the phone today. More on this here.

So what does that mean for closing a credit card? Depends on your situation:

• It may be worth closing a credit card if simply having it in your possession is too much. Like if you have a hard time not charging a card, simply because you know it exists, then I can understand how not having the option can be freeing
• You may also want to close a card if the annual fee is more than you want to pay (as was my case). In a world where the only 2 options are to keep the card or close the account, then what you save in annual fees (by closing the card) may well be worth the temporary hit to your score
• However, try to avoid closing credit card accounts that comprise a big chunk of your credit age. I was able to easily see this by logging into Credit Karma’s site and looking at the age of all my credit accounts on a single page
• For cards where you’re trying to avoid annual fees – see if you can downgrade to a no-fee card instead. Confirm with your institution that this will keep your credit history in tact, how this may impact existing subscriptions or automatic charges, and that the change will not impact your score

Ultimately, I was able to downgrade my card to one that doesn’t carry an annual fee. Since I don’t plan to ever use it, I’ll just have to pretend it doesn’t exist for now. While also checking that it remains unused. 😬

Cheers to learning together, gang.