Don't Cancel Little-Used Credit Cards

Q. I have a balance of about $10,800 on an American Express card that has a limit of $11,500. I also have three other accounts that I haven't used in a while, with a total credit limit of $6,800. When those cards expire and the issuers send me new ones, should I activate them or allow the accounts to expire?

A Go ahead and activate your new credit cards. With that $10,800 balance, you are already using 59 percent of your total available credit of $18,300. That's too high a percentage. But if you cancel the cards, your usage will shoot up to 94 percent, which will lower your credit score.

After you've activated your cards, stow them in a drawer to avoid being tempted to use them until you've paid off a good chunk of the amount you owe on the American Express card. Then use each of the new cards once a year to ensure that the issuers don't cancel them -- and pay off the balances immediately.