Cancel That Credit Card?
if you have more credit than you need? Should you cancel an unused card, or keep it? How does canceling a credit card affect your credit rating? Take a look with us at the answers to some of these common questions.
Understanding credit utilization
To know whether you should cancel an unused credit card, you first have to understand the concept of "credit utilization" (otherwise known as your "debt-to-credit ratio"). This is the ratio of the credit you use compared to the amount of credit available to you.
A major factor in determining your credit score is this utilization rate – not the size of your credit limits or the amount you have charged to your cards. What matters is the...