Rename folders in Hotmail

When you create a folder or create a subfolder in your Hotmail account, part of the creation process involves choosing a name for the new folder / subfolder. But Hotmail lets you rename a folder after the fact, and you can change names of folders and subfolders as many times as you'd like, and the new names will be reflected immediately on all computers from which you check your Hotmail emails; this also applies to email clients (like Windows Live Mail) you have connected with Hotmail - but you may have to restart your email program to see the new folder names.

Change the name of custom email folders in your Hotmail account

Once you have signed in to you Hotmail account, go to your inbox; then, move your cursor above the "Folders" button on the left pane. Click on the "gear" icon that appears, and choose "Manage folders" from the menu that opens:
Manage folders in Hotmail account

Windows Live Hotmail will redirect you to your Manage Folders screen, which shows all folders and subfolders currently created in your account (both standard folders like Inbox and Junk, as well as all custom folders you added yourself).

Hotmail Tip: Notice that some email folders have a checkbox on the left of their name, and some don't: email folders without a checkbox cannot be renamed.

Check the checkbox next to the email folder or subfolder you want to rename, as shown in the screenshot below:
Select the Hotmail folder or subfolder to rename

Then, click on the "Rename" link displayed at the top of the listing: only one folder can be renamed at a time (if you select several folders or subfolders, Hotmail will give you a "This feature doesn't work when there are multiple folders selected" error message - just start over and make sure to only check one folder for renaming).
Rename the selected email folder

Hotmail will then load the "Rename Folder" screen:
Windows Live Hotmail Rename Folder screen

The current folder's name is shown next to "Old folder name" - type inside the "Folder name" text field to rename the folder something else. Once you are done and have checked the new name for any typo, click on the "Save" link at the top.

As soon as you do, Hotmail brings you back to the Manage Folders page, and you should see the renamed folder reflected in the listing - note that, since Hotmail email folders are automatically sorted alphabetically based on their name, the renamed folder may have moved up or down in the list...
Renamed email folder in Hotmail.com

And this is how you rename folders (or change the names of subfolders) in Hotmail!