Should You Cancel a Store Credit Card Opened During the 2022 Holidays?

Someone hands a credit card to a cashier.

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It could be a good idea.

Key points

  • Store credit cards tend to charge a lot of interest, and your usage of them is often limited.
  • If you recently opened a store credit card, closing it could prevent you from overspending.
  • Closing a card can impact your credit score, but the hit will be lighter if it’s a newer account.

In the course of your holiday shopping, you may have accepted an offer to open a store credit card. And that card may have resulted in a nice amount of savings on a big purchase.

Often, when you first open a store credit card, you get a discount on your initial purchase. So if you were buying a $200 haul and scored a 20% discount, opening that card saved you $40, which is a pretty good deal.

But store credit cards have their drawbacks. And so if you opened one recently, you may be thinking of canceling it now that your holiday shopping is done with. But should you? Or does it pay to keep that store card around?

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The case for closing a store credit card

Store credit cards limit you to a specific retailer or group of associated retailers, whereas a regular credit card allows you to make purchases anywhere. But that’s not the main reason to consider closing a store credit card.

Rather, what makes store credit cards dangerous is their tendency to come with exorbitant interest rates. And if you end up carrying a balance on a store credit card, it could constitute a huge financial strain as interest on that balance accrues.

Plus, having a store credit card might tempt you to make non-essential purchases. Let’s say you got a store credit card from your favorite clothing shop. That means the only thing you can buy with that card is, well, clothing (and maybe accessories, too).

Now it’s one thing to rack up a credit card balance to cover expenses like food, gas for your car, and medication. But you really don’t want to be tempted to rack up debt just to acquire some new jeans and shirts.

Will closing a store credit card hurt your credit score?

One thing you need to be careful about when closing credit cards is hurting your credit score. That’s because the length of your credit history goes into calculating that number. And so generally speaking, you need to be careful when closing long-standing accounts, since that could shrink the average age of your open accounts and drag your credit score down.

But if you’re looking at closing a store credit card you opened just weeks ago, you shouldn’t have to worry about the impact on the length of your credit history. Generally speaking, closing a newer account will cause minimal damage, especially if you have other credit cards you’ve had open for years.

All told, having a store credit card certainly isn’t a terrible thing. But if you’re worried you’ll be tempted to rack up balance after balance, then it’s worth closing a recently opened store card, since doing so could spare you a world of debt.

And besides, you can always use a regular credit card to shop at your favorite retailer. And that could make it possible to rack up cash back or other rewards that are less restrictive than the rewards your store card comes with.

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