Raise your hand if you’ve heard that you shouldn’t ever close your oldest credit card.
The logic behind this piece of misguided advice seems sound at first: The average age of your credit lines affects your credit score, and the older, the better. Your oldest credit card, therefore, weights the average to lengthen the overall duration of your accounts, and if you close it, you lose that outlier and your average account history shortens.
There’s only one (major) flaw in that thinking: When you close an account, it doesn’t disappear from your credit.
“There’s this assumption that the scoring model doesn’t see an account anymore after it’s closed,” explains John Ulzheimer, credit expert at CreditSesame.com, “but even closed accounts are still considered in your score.” Further, he explains, a year from now, your 20-year-old line of credit will be 21 years old, and just as valuable whether or not it’s open.
Of course, closing a credit card could be problematic for another reason: The effect it has on your credit utilization rate, which is how much credit you’re using out of the total amount available to you. When you close a card, your total credit available decreases and the percentage you’re using spikes. But no matter how old your card, it will have that same result.
The reality is that closing your oldest card won’t affect your credit any more than another card in your arsenal. While everyone needs to evaluate their credit cards for themselves, if your oldest card is costing you more money or more trouble than it’s worth, you can consider giving it the axe.
“If you’re going to close an account, do it because the card has a horrible interest rate or an annual fee,” advises Ulzheimer. “Not because of its age.”