Core Insights - Canceling credit cards can negatively impact credit scores due to factors such as credit history length, credit mix, and credit utilization ratio, which is the second-most important factor in credit scoring [1][4][8] - The average American carries approximately 3.7 credit cards, with nearly 75% using credit cards for shopping, indicating a widespread reliance on this payment method [3][4] Impact of Canceling Credit Cards - Canceling a credit card shortens credit history and alters credit mix, both of which are significant factors in credit scoring [1][4] - The credit utilization ratio increases when a card is canceled, as the available credit decreases while the amount used remains the same, leading to a higher utilization ratio [1][4] - Payment history, which accounts for 35% of the credit score, is also affected by canceling a card, as it may result in the loss of positive payment history [1][4] Considerations for Canceling Cards - It may be justified to cancel credit cards if managing multiple cards leads to late payments or if cards have annual fees that are not worth the cost [6][7] - Keeping cards without annual fees or those that are the oldest can be beneficial for maintaining a good credit score [7][8] - A strategic approach to canceling cards, such as focusing on those with annual fees or lower credit limits, can help mitigate the impact on credit scores [10][11] Recommendations for Managing Credit Cards - Gradually canceling unnecessary cards rather than all at once can limit the negative impact on credit scores [11][12] - Maintaining a manageable number of credit cards, ideally around three to four, allows for the benefits of rewards programs without overwhelming management [12][13] - Regularly redeeming rewards and using card perks can justify keeping multiple cards, but excessive cards can lead to difficulties in tracking payments [13]