What To Do With Dead Credit Cards

If you've got a number of credit cards gathering dust, you need to close down the accounts. Otherwise, it could affect your credit rating.

How many credit cards have you got in your wallet? More to the point, how many have you got that you don't actually use any more?

According to credit card provider, Morgan Stanley, almost half of all British adults are carrying around plastic that they haven't used at all in the last 12 months.

Most of us use only one, possibly two, active credit card at any one time and the ones most likely to be on the backburner are those with expired interest-free offers. Around 33% of us are carrying around old 0% credit cards - 10% as many as three - when it would make much more sense to close the accounts.

While it's great that credit card users are clearly taking advantage of interest-free deals, it doesn't look good for your credit files if you've got lots of cards that you no longer use. When prospective lenders check your credit report, it makes them think that you've got rather more access to available credit than they'd like and they'll worry that you may go on a spending spree. It's therefore, important when you stop using a particular credit card permanently to make sure you cancel it.

Cancelling a credit card doesn't mean just cutting it up! You need to formally ask the credit card company to close your account and follow up afterwards to make sure it's been done.

The fact that you've had a particular credit card will stay on your files for six years but it will show up as settled and will eventually disappear off the report. Just don't cancel a whole load at once because, just as multiple card applications look a tad suspicious, so do multiple cancellations.

A further advantage is that in a year or two, you might even qualify for introductory 0% introductory offers from cards you've had in the past, as you'll probably be considered a new customer.

As it happens the cards used most frequently were those offering cash back: 70% of respondents cited these as the cards they used for everyday spending so cardholders are clearly getting savvier about getting better deals. Now it's time to get savvy about the impact dormant credit cards can have on your credit rating.

> Compare credit cards here at the Fool.