The average American has 3.9 credit cards, according to Experian. Consumers often consider canceling cards they don't use, but it might not be that simple.
CardRates.com CFP and personal finance expert Bobbi Rebell joins Wealth host Brad Smith to outline the pros and cons of canceling a credit card that consumers should take into consideration.
"The biggest pro [in canceling a credit card] is if you are paying a fee for something that you are not using," Rebell says. "We don't want anyone to be paying that fee, but what you can do is go to the credit card company and ask for them to transition you [or] downgrade you to a different credit card, hopefully without a fee, or maybe with a smaller fee and benefits that you're actually going to be using."
Another positive of canceling an unused credit card is minimizing fraud risk. "It's an easy way to simplify your finances: one less thing to take care of, one less thing to track," Rebell explains.
Cutting a credit card can also help limit spending by "taking away that one less temptation" to overspend.
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Rebell notes, "There are some negatives [that come with canceling a credit card] that people should be very aware of because they are very serious," outlining that closing a credit card can hit your credit score and hurt your credit history.
Watch the video above to learn more about when it's the right call to cancel a credit card.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
This post was written by Naomi Buchanan.