It is true that having many open credit accounts can be bad for your credit score. Lenders may think you have too many liabilities and too much opportunity to borrow beyond your means. However, not renewing a credit card may not be the best solution to this problem. Once the account is opened, you're in something of a Catch 22, because allowing it to lapse can actually be worse for your score.
Age of Credit
Lenders like to see a credit history that's been established over a long period, so if you've held the card in question for several years, it's probably advantageous to keep it. If you choose not to renew, it may make your credit history look younger than it actually is, which will be deleterious to your credit score.
Available Credit
One number that's crucial to your score is the ratio of your available credit to the balance you actually owe. If you close a card that has a zero balance, you've reduced your available credit, but your owed balance remains the same, altering that ratio unfavorably and lowering your credit score.
A Better Strategy
Instead of choosing not to renew a card you seldom use, it may be smarter to put it to work for you to improve your score. One way you can do this is to use it once or twice a year to make a purchase, but be sure to pay off that balance promptly at the end of the month. This means you'll be using the card to demonstrate your responsible use of credit, but not increasing the total amount of debt that you hold.
New Accounts
Use your experience with this card as a reminder to better manage your credit in the future. Remember the key fact that having too many open accounts will drop your score. Work on paying off the balance on the cards that you have, and resist the temptation to open that store card you're offered, or to transfer balances to a new, low-interest account. In the long run, it won't work in your favor.
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