
Closing credit cards can have a significant impact on your credit score, but there are ways to minimize the damage. Closing a credit card can account for up to 30% of your credit utilization ratio, which is a major factor in determining your credit score.
This means that if you close a credit card with a $1,000 limit, your credit utilization ratio could increase by 10% if you have other credit cards with a total limit of $10,000. This can be a problem if you're already using a lot of credit.
However, closing a credit card can also have some benefits, such as reducing temptation to overspend and saving you money on annual fees.
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Closing a Credit Card
Closing a credit card can have serious consequences for your credit score, but it's not always a bad idea. Closing a card can hurt your credit score if it changes your credit utilization ratio, which measures how much of your total available credit is being used.
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A closed account will remain on your reports for up to seven years (if negative) or around 10 years (if positive), affecting the average age of your credit. The longer you hold a credit account, the more valuable it is in your credit score determination, as it provides more credit history.
Closing a card with lots of available spending room can squeeze your credit utilization ratio, making it harder to manage your debt. This is especially true if you're already using a high percentage of your credit limit.
To properly close a credit card, pay off any balance, redeem unused rewards, and consider reviewing your account age and credit utilization ratio before making a decision. Closing newer accounts with lower credit limits may actually boost your average account age and FICO score.
Here are some steps to follow when closing a credit card:
- Pay off any balance on the account
- Redeem any unused rewards
- Consider reviewing your account age and credit utilization ratio
- Contact the issuer's customer service department to cancel the card
- Follow up in writing to confirm the account has been closed
- Check your credit reports 30 to 45 days after cancellation to ensure the account has been reported as closed and your balance is $0
Closing a credit card can affect your credit score, but it's not always a bad idea. If you're considering closing a card, think carefully about the potential consequences and consider alternative solutions, such as negotiating with the issuer or seeking credit counseling.
Impact on Credit Score
Closing credit cards can have a significant impact on your credit score. Closing a credit card can potentially reduce your credit utilization ratio, which can negatively affect your credit score.
Credit utilization measures how much of your total available credit is being used, based on your credit reports. The more available credit you use, the worse the impact will be on your score. Aim for a ratio of around 30%.
Closing a credit card can also impact your credit mix, which refers to the different types of credit accounts you have. Having a variety of account types can help your credit score by showing your ability to manage multiple types of debt responsibly.
A closed account will remain on your reports for up to seven years (if negative) or around 10 years (if positive). As long as the account is on your reports, it will be factored into the average age of your credit.
For more insights, see: Available Credit vs Current Balance Discover Card
Here's a simple example of how closing a credit card can backfire:
- Credit card number one has a $1,000 limit and a $1,000 balance.
- Credit card number two has a $1,000 limit and a $0 balance.
- Your credit utilization on both cards combined is 50% ($1,000 total balances ÷ $2,000 in total limits = 50% utilization).
- Close credit card number two, and your credit utilization jumps to 100% ($1,000 total balances ÷ $1,000 total limits = 100% utilization).
The longer a credit card has been open and used responsibly, the more beneficial it tends to be for your credit scores. Closing a credit card with a short history may be less impactful to your credit score than closing a credit card you've had for many years.
Closing a credit card can also squeeze your credit utilization ratio, especially if you have a card with lots of available spending room – credit limit $5,000 or higher, for example.
Alternatives to Closing
If you no longer want one of your credit cards, but aren't prepared for the potential hit to your credit score, there are other options to consider. Closing a card could have a negative effect on your credit, so it's worth exploring alternatives.
You can consider not using the card anymore, but keeping it open to maintain a longer credit history. Closing a credit card can sometimes hurt your credit, but this way you can avoid the potential damage.
If you're paying an annual fee that's no longer worth it, you can try to negotiate with your credit card issuer to waive the fee.
Preserve Low-Interest Rates

If you have a credit card with a low interest rate and perks, you might be hesitant to close it. You can take advantage of cash back rewards for big purchases or enjoy an exceptionally low interest rate that may not be available if you apply for the same card in the future.
Paying off your balance before closing the card might be a good idea, especially if you have a balance still due. This will help you avoid continued interest charges and make it easier to close the account.
Consider the perks of your card, such as cash back rewards or a low interest rate. These benefits can be valuable, especially if you're not tempted by the card's features.
Here are some options to consider:
- Pay off the balance to avoid continued interest charges.
- Take advantage of cash back rewards for big purchases.
- Enjoy an exceptionally low interest rate that may not be available in the future.
By preserving low-interest rates and perks, you can make the most of your credit card and avoid the potential drawbacks of closing the account.
Is It Better to Keep Unused Accounts Open?
Keeping unused accounts open can be a smart move for your credit score. According to Chad Rixse, a financial planner, keeping accounts open, even with no balance, increases your total amount of credit available and decreases your utilization rate.
This is because the Big Three credit bureaus like to see more and older accounts, which can positively impact your credit score. It's a good idea to keep accounts open, even if you're not using them, as it shows lenders that you're committed and able to handle long-term debt.
If you have other credit cards with high balances, closing unused cards can increase your utilization rate, which can reduce your score. However, if the unused card(s) you intend to close is fairly new, has a low credit limit, or you don't have much debt, there's likely to be a minimal impact on your credit score.
Here are some scenarios where keeping an unused account open might be a good idea:
- If the credit card is one of your oldest cards, it's a good idea to keep it open and make consistent on-time payments on it.
- If there is a large annual fee on the card, consider keeping it open if you're not benefiting from card perks or you no longer find the card useful, but be aware that closing it could worsen your credit utilization by reducing your available credit limits.
Alternatives to Subscription Cancellation

If you no longer want one of your subscription services but aren’t prepared for the potential inconvenience of canceling, there are other options to consider.
You can place your subscription on hold, which is a great alternative to canceling outright. This way, you can take a break without losing access to the service.
Placing your subscription on hold can be a good option because it doesn't affect your credit score. You can also use this time to negotiate a better rate or plan with the service provider.
Some subscription services allow you to downgrade or change your plan to a lower-cost option, which can be a more affordable alternative to canceling. This way, you can still use the service without breaking the bank.
Discover more: Can a Credit Card Company Close Your Account without Notice
Impact on Credit History
Closing a credit card can have a significant impact on your credit history, but it's not as simple as just closing the account. A closed account will remain on your credit reports for up to seven years (if negative) or around 10 years (if positive).
The length of your credit history is another factor that affects your credit score, and it's determined by the age of your oldest account and the average age of your accounts. Closing your oldest credit card can reduce the length of your credit history.
A long history of responsible credit use has the potential to improve your score, so it's essential to consider the age of your accounts before closing any credit cards. If you close your oldest credit card, the length of your credit history will decrease.
Here's a breakdown of how long a closed account will remain on your credit reports:
- Up to 7 years (if negative)
- Around 10 years (if positive)
This means that even if you close a credit card, the account will still be factored into the average age of your credit.
When to Close a Credit Card
Closing a credit card can be a good idea in certain situations. You may want to consider closing a card if you've consolidated your debt and no longer need the account.
High annual fees can also be a reason to close a card, especially if you're not getting enough value from the benefits. Some premium credit cards have annual fees that are just too high to justify keeping the account open.
If you have a card with a high interest rate, it may be a good idea to close it and switch to a lower-interest card if you need to finance a large purchase. Closing a card can also help you avoid overspending, as studies suggest consumers tend to spend more when using credit cards than they do with cash or debit cards.
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Reasons to Cancel
If you've got a credit card with a high annual fee that's eating into your wallet, it's time to consider canceling it. These fees can add up quickly, and if you're not using the card's benefits to justify the cost, it's better to close it.
You may also want to cancel a credit card if you've consolidated your debt onto a balance transfer card. Closing the old account can help you avoid accumulating new debt.
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Another situation where canceling a credit card makes sense is if you're struggling to manage the debt you've incurred. If the easy access to credit is tempting you to overspend, it's better to lock the card away.
You can also consider canceling a credit card if you're getting divorced and you share an account with your future ex-spouse. Closing the account is often the only way to remove your name from it.
Retail credit cards that you no longer use can also be canceled. If you don't shop at the store that issued the card, it's not doing you any good to keep it open.
Here are some specific situations where canceling a credit card might be a good idea:
- You consolidated your debt
- You have a card with a high annual fee
- You have a card with a high interest rate
- You have a joint credit card with your ex
- You have a retail credit card for a store you no longer visit
Separation or Divorce
If you're going through a separation or divorce, it's a good idea to close joint credit card accounts right away. This is because you'll be liable for any past or future charges made on the account.
You could end up being responsible for charges made by your former spouse out of spite, even if your divorce decree says otherwise.
When to Cancel a Subscription?
Everyone's circumstances are different, but there are times you might decide that closing a subscription is the right call.
The annual fee may no longer be worth it, just like with credit cards.
You may find that you're not using the service or feature enough to justify the cost.
It's worth considering alternatives to closing a subscription, just like with credit cards.
If you're unsure, take a close look at your budget and see if you can make the service work for you.
Minimizing Impact
Closing a credit card can impact your credit utilization ratio, potentially dinging your credit score. Credit utilization measures how much of your total available credit is being used, based on your credit reports.
To minimize the potential damage, consider closing the card that affects your credit score the least, such as one with a small credit limit or one you've had for the least amount of time. This approach is especially helpful if you're juggling several credit cards.
Reducing all your credit card balances to $0 before closing a card can also minimize or avoid any credit score damage. This is because credit utilization has a significant impact on your credit score, with a higher ratio negatively affecting your score.
For your interest: Is Credit Utilization Based on All Cards
Contact Issuer
You can easily close your credit card account by contacting the issuer directly. This number can usually be found on the back of your card.
They may ask for written confirmation, so have your card handy to make the process smoother.
You can simply call the credit card issuer to initiate the account closure process.
Optimizing Resource Utilization
Closing a credit card can increase your credit utilization ratio, which is a major factor in credit scoring models. This is because it reduces the amount of credit available to you, making it harder to keep your utilization ratio below 30%.
If you have unused credit cards, it's essential to consider whether closing them will worsen your credit utilization ratio. For example, if you cancel a card with a high credit limit, your available credit will drop, and your utilization ratio may increase.
You may want to reconsider closing your oldest credit card, as keeping it open and making consistent payments on it can show future lenders that you're committed to managing debt.

Closing a credit card with a large annual fee might make sense if you're not benefiting from the card perks, but consider whether it will worsen your credit utilization ratio by reducing your available credit limits.
Here are some examples of how closing a credit card can impact your credit utilization ratio:
If you cancel Card 3, your available credit will drop to $13,000, and your utilization ratio will increase to 54%.
For more insights, see: Will Bank of America Reopen a Closed Credit Card Account
How to Minimize Impact for an Account
Closing a credit card can sometimes hurt your credit, but there are ways to minimize the potential damage. Closing a credit card can impact your credit utilization ratio, potentially dinging your credit score.
To minimize the impact, consider paying your balance in full every month. Paying your balance in full is especially important before closing a credit card account.
You should aim to pay your credit card balances in full every month. This not only protects your credit scores but also can save you a lot of money in interest.
If this caught your attention, see: Does Paying Credit Cards Early Help

Here are some strategies to consider:
- Reduce all your credit card balances first (preferably to $0), so you can either minimize or avoid any credit score damage.
- If you need to cancel a card, do your best to reduce all your credit card balances first.
- If you're currently juggling several credit cards, you may want to consider closing the card that affects your credit score the least, such as one with a small credit limit or one you've had for the least amount of time.
The higher the credit utilization ratio, the more it can negatively impact your credit score. That's why it is commonly recommended to keep the ratio below 30%.
General Information
Closing a credit card account is sometimes necessary, and it won't necessarily harm your credit score. However, it's essential to understand the potential impact on your credit.
FICO uses credit history as 15% of the overall credit score, with payment history and amounts owed accounting for 35% and 30% respectively. This means that closing a credit card may not significantly affect your credit score, especially if you have a good payment history.
If you do decide to close a credit card, paying down your other credit card balances first is key to avoiding damage to your credit score. This will help prevent a spike in your credit utilization ratio, which can negatively impact your credit score.
On a similar theme: Minimum Payment on Discover Credit Card
Account Benefits

Having an account with us comes with some amazing benefits. You'll get access to exclusive discounts, which can range from 10% to 20% off select products, depending on the item.
Our rewards program is designed to give you points for every purchase you make, which can be redeemed for free products or services. For example, if you spend $100, you'll earn 100 points.
You can even earn points for referring friends to our platform, with a bonus 20 points for every successful referral. This means you can earn points just for sharing our services with others.
As a valued member, you'll also get priority customer support, which means you'll get help faster when you need it.
High Annual Fees
If your credit card issuer charges a high annual fee, it's worth considering whether it's worth the cost.
Before canceling the account, call your card issuer to ask for the annual fee to be waived.
You might be pleasantly surprised if they agree to waive the fee.
An annual fee on a credit card that you don't use or benefit from is another story altogether.
Once a credit card is canceled, you won't be able to reopen the account.
Key Takeaways

Closing a credit card account can be a necessary step, and it's not always bad for your credit score. Closing a credit card can be done without harming your credit score, as long as you pay off all your balances first.
A credit card can be canceled without affecting your credit history, which accounts for 15% of your overall credit score. Payment history and amounts owed have a much larger impact, making up 35% and 30% of your credit score, respectively.
Closing a credit card can hurt your credit score if you don't pay off all your balances, which can increase your credit utilization. However, closing a charge card won't affect your credit history, making it a good option if you're looking to cancel a card you no longer need.
Here's a breakdown of how different types of credit cards can affect your credit score:
If you're considering closing a credit card, it's essential to weigh the pros and cons and understand the potential impact on your credit score.
Sources
- https://www.investopedia.com/how-to-cancel-a-credit-card-4590033
- https://www.bankrate.com/credit-cards/advice/is-closing-a-credit-card-good-or-bad/
- https://www.chase.com/personal/credit-cards/education/credit-score/pros-cons-closing-credit-card-account
- https://www.incharge.org/debt-relief/credit-counseling/credit-score-and-credit-report/close-several-credit-cards-at-once-score-effect/
- https://www.capitalone.com/learn-grow/money-management/how-to-cancel-a-credit-card/
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