What is the age of this card, the age of your 2nd oldest card, and your average age of all credit accounts? Sometimes it is okay to close your oldest card, so long as it's not substantially older than the next in line. It should still continue to report for another decade after closing (a CapOne card I closed in 2007 just fell off of my reports), and by then hopefully a single card dropping off shouldn't affect your average much at all.
Edit: Scupra beat me to it. I'm too chatty. 
Certainly close it if it's of no use to you. Worst case scenario you'll lose a few weeks of average account age and an insignifiant amount of credit length ten years from now - your reports should be thick and clean at that point, so it's a non-issue. Nothing wrong with getting rid of some dead weight.
EDIT: I see that you have another Capital One card; if it's an option in your online account you could merge the $500 into your other account when you close it. A woird of caution, though... CapOne requires 6 months between credit line increases and that would restart your clock. If you anticipate a larger increase in the next 6 months, may just be best to let the $500 go.
@Anonymous wrote:My next oldest card was obtained within the same year. My overall age is less than two years, these two cards are 3 years old. I have 16 accounts all in good standing with a mix of revolving credit, auto and real estate. I'm using less than 10% of my available credit.
Under that scenario, it doesn't have much value to you, so there's no reason not to close it.
But if you apply for another card with Capital One you'll probably get hit with a triple pull so you might want to reconsider doing that.
Close it and/or conbine the CLs. Maybe upon talking to rep stating that you want to close it, you might get lucky and get the card upgraded 
@HeavenOhio wrote:Capital One will allow you to have five cards as long as you allow at least six months between opening new accounts. But according to posts here, only two "subprime" cards are allowed. I'd guess that you could keep your two cards and add a "good" card, but I wouldn't apply without checking with them first.
Having said that, I'd close this account. It's not going to have enough of an effect on your AoOA (age of oldest account) or AAoA (average age of accounts) to matter.
The CapOne limit is a weird one and applies differently to different people.
- There's no cap if you have cards that were acquired by them (I had 4 Platinum cards at the beginning of last year, 2 of which were from different lenders originally) - which means they won't make you close accounts if you exceed a "limit."
- If you have a card currently in Credit Steps, the limit is 1 personal card - period.
- If you are applying for any card other than V, V1 and QS (not QS1), their T&C state that you will be denied if you have 2 or more cards already.
- If you are applying for V, V1, or QS (not QS1), their T&C state that you will be denied if you have 5 or more cards already.
Hope that helps and yes, sometimes people seem to be exceptions to the official CapOne terms and conditions. Cobranded cards do not count against maximums.