When to Close a Credit Card
Closing a credit card seems simple, but it can have real consequences for your credit score. Sometimes closing a card is the right move — and sometimes it's better to keep it open even if you never use it.
How Closing a Card Affects Your Credit
- Increased credit utilization: When you close a card, you lose that credit limit. If you carry balances on other cards, your overall utilization ratio goes up.
- Reduced average account age: Closing an older card can lower the average age of your accounts over time, though the closed account stays on your report for up to 10 years.
When You SHOULD Close a Credit Card
The Annual Fee Isn't Worth It
If a card charges an annual fee and you're not using its perks enough to justify the cost, closing makes sense. Before you cancel, call the issuer and ask for a product change to a no-fee card — this preserves your account history.
It Tempts You to Overspend
If having the card leads to spending you can't afford, the credit score impact of closing it is far less costly than accumulating debt.
You're Going Through a Divorce
Joint credit cards should typically be closed or converted to individual accounts during a divorce.
When You Should NOT Close a Credit Card
It's Your Oldest Card
Your oldest credit account has an outsized impact on your credit history length. Keep it open and use it for a small recurring charge.
You Have High Balances on Other Cards
If your credit utilization is already above 30%, losing another card's credit limit will push it higher.
You're About to Apply for a Mortgage or Loan
Don't make credit changes in the 6-12 months before a major credit application.
The Card Has No Annual Fee
If it costs nothing to keep, there's rarely a reason to close it. Use it once every 6-12 months to keep it active.
How to Close a Credit Card the Right Way
- Redeem all rewards — points are usually forfeited when you close
- Pay off the balance completely
- Contact the issuer — ask about retention offers first
- Request written confirmation of closure with zero balance
- Check your credit report after 30-60 days
The Product Change Alternative
Before closing any card, ask about a product change (downgrade). You can often switch to a no-fee version, keeping your account history and credit limit while eliminating the annual fee. This is almost always better than closing.
Bottom Line
Don't close a credit card without thinking it through. In most cases, the best move is a product change to a no-fee card or simply keeping the card open with minimal use.
