Every credit card has a shelf life, and that’s true whether it surpasses its expiration date or you decide to cancel or upgrade to a new credit card. Sometimes even regular use can wear down your card so much that you need to get a new one.
There’s nothing wrong with this natural cycle, yet it does leave us with a problem to solve. What do you do with those old credit cards?
Unfortunately, handling old credit cards the wrong way can have a lasting negative effect on your credit score. With that in mind, it’s important to understand the best ways to deal with old cards and expired cards you accumulate over time.
Think carefully before you close accounts
If you have a credit card that you simply don’t use, you may be tempted to cancel the account. However, this is actually the opposite of what you should do, mostly because of the way your credit score is determined.
The first detail to understand is the fact that the average length of your credit history makes up 15 percent of your FICO score. Closing older accounts will shorten this average, and it can work against you in terms of your score.
Second, you should know that the amounts you owe in relation to your credit limits make up another 30 percent of your FICO score. This is often referred to as your credit utilization ratio. When you close an account that’s no longer in use, you’re reducing the amount of credit available to you, which could increase your utilization into a range that could hurt you. This also causes your credit score to go down.
Most experts suggest keeping your credit utilization below 30 percent for the best results, which means you’ll maintain $3,000 in debt or less for every $10,000 in open revolving credit available to you.
If you don’t want to hold on to a specific credit card for whatever reason, there are other options worth considering, such as the following:
Consider downgrading your card
Some consumers decide to close accounts they aren’t using in order to avoid an annual fee, but this is not always required. Depending on your card issuer, you may be able to downgrade the credit card you have with an annual fee to a different card product that doesn’t charge one.
To downgrade your credit card to a no-fee option, call your card issuer using the number on the back of your credit card and ask.
Upgrade to an unsecured card
Secured credit cards are a great asset for consumers looking to boost their credit scores. However, if you have grown out of your secured credit card, ask your credit issuer if it can upgrade you to an unsecured credit card. Some issuers have options in place to graduate cardholders from a secured credit card, but if you have found yourself in a position where you feel ready for the next step in your financial journey, don’t simply cancel the card; call your issuer and ask for an upgrade, given they have unsecured options available.
Keep the card for small purchases
If you aren’t interested in upgrading or downgrading your card, but you aren’t quite ready to take scissors to it either, consider keeping the account open by using the card occasionally. You could simply put one small charge on it every month, say at the gas station or grocery store, in order to keep the account active.
You could also use it for any recurring payments, such as a streaming service or newspaper subscription, and set up automatic payments so your balance gets paid on time every month. This is an even more seamless way to keep the account active with little effort required from the cardholder.
What to do with expired debit and credit cards
If your credit card or debit card is plastic and it is past its expiration date, getting rid of it is pretty easy. All you have to do with expired credit and debit cards is cut them up with scissors and throw them away in the trash. Some paper shredders also have a slot for credit and debit cards that makes it easy to destroy them along with other important documents you no longer need.
Disposing of metal credit cards
Most metal credit card issuers will destroy your card if you send it back to them. If you would like a prepaid envelope sent to you to mail yours back, or if you want the best address to send it to, call the number on the back of your card to make this request.
If you don’t want to mail your card and you live near a branch, you may also be able to drop your credit card off for disposal. Local bank branches may not destroy metal credit cards themselves, but they will know where to send them.
Join the world of expired card hobbyists
Interestingly, expired credit cards have become a collector’s item of sorts—at least for some people. There is even an American Credit Card Collectors Society whose stated purpose is to “be a resource for the credit card collector and a communication link for members.”
According to the group rules, older cards are generally worth more money, as are cards in excellent condition that have never been signed. Rare credit cards are also worth more in general, and especially if they feature a celebrity or have something special about them.
Your expired Chase Freedom Flex℠ may not be worth a premium, but who knows? If you stick your old cards in a sock drawer long enough, perhaps they’ll be worth something someday.
How to find old credit card accounts
Here’s another question you may find yourself asking: What if you have open credit card accounts you forgot about? Without a physical card, it can be difficult to remember the details, like your account number, the type of card you had or the card issuer.
To find old credit card accounts, you should start by looking at your credit reports. Head to the website AnnualCreditReport.com, which will let you access your reports from all three credit bureaus—Experian, Equifax and TransUnion—for free. Consumers can access their credit reports for free each week due to COVID-19, which is in effect until April 20, 2022.
Once you have your credit reports, you can look them over for old accounts you may have forgotten about while you check for accuracy overall. If you find you have credit cards you’ve forgotten about, you can decide whether to call the card issuer to ask for a new physical card—or do nothing at all.
The bottom line
There are a few scenarios where it makes sense to close a credit account, such as high annual fees. But even in this scenario, you can always call the issuer to find out if it is possible to downgrade to a card with no annual fee. However, even if you choose to close one line of credit but continue using your other credit cards responsibly, your credit score can repair itself.
Who knows, maybe shoving it in your sock drawer is the best solution. Just don’t forget about it entirely because some issuers will automatically close an account due to inactivity.