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If you’ve ever stared at an old credit card in your wallet, especially the one you barely use anymore, (maybe charging a cup of coffee once in a while just to keep it “active”) you’ve probably asked yourself: should I just close this thing? 

It sounds simple enough. After all, if the card isn’t serving you — whether it has an annual fee, or you’ve replaced it with something that earns better rewards — why not cut ties? But in the world of personal finance, credit decisions are rarely that straightforward. Closing a credit card can have ripple effects on your credit score, debt utilization, and even your long-term borrowing potential. 

Whether you should close a credit card depends less on emotion and more on strategy. Let’s unpack the real implications, both good and bad, so you can make a well-informed decision instead of a reactive one. 

 

How Closing a Credit Card Can Affect Your Credit Score 

The biggest misconception about closing a credit card is that it automatically improves your credit. In reality, it can sometimes do the opposite. 

Your credit score, particularly the FICO® Score used by most lenders depends on five main factors: 

1. Payment history (35%)
    
2. Credit utilization (30%)
    
3. Length of credit history (15%)
    
4. New credit (10%)
    
5. Credit mix (10%) 

Closing a card can impact at least three of those: utilization, length of credit, and mix.  

 

1. It Can Raise Your Credit Utilization Ratio

Credit utilization measures how much of your available credit you’re using at any given time. Ideally, you want this ratio below 30%, though under 10% is even better for top-tier scores. 

When you close a card, you lose that card’s available credit limit. That means your total available credit shrinks — even if your balances stay the same. 

For example, if you have $10,000 in total available credit and carry $2,000 in balances, your utilization is 20%. If you close a card that had a $5,000 limit, your total available credit drops to $5,000 — and your utilization doubles to 40%, which could lower your score. 

This is why credit experts generally advise keeping older, unused cards open, especially if they don’t charge an annual fee. 

 

2. Your Average Age of Credit

 

Lenders like to see long credit histories because they indicate consistent borrowing and repayment behavior. Closing an old card doesn’t immediately erase its history because it can stay on your report for up to 10 years, but it stops aging with the rest of your accounts. Over time, that can reduce the average age of your credit accounts. 

If that card happens to be your oldest line of credit, your average account age will shorten once it falls off, which could ding your score. That might not matter if you have several other well-established accounts, but it can hurt if your credit file is thin. 

 

3. It May Change Your Credit Mix and Account 

 

Having different types of credit like credit cards, loans, and lines of credit — all adds to your credit mix. Closing a card might reduce this diversity, though the effect here is usually minimal compared to utilization. In short, closing a card can temporarily dent your score. How much depends on your overall credit profile. The fewer cards you have, the more it matters. 

 

When Closing a Credit Card Might Be a Good Idea 

Despite the risks, there are legitimate reasons to close a credit card, especially when the costs or risks outweigh the benefits. 

1. The Annual Fee Isn’t Worth It

Many premium credit cards charge annual fees, sometimes upwards of $95 to $550 in exchange for perks like airport lounge access, travel credits, or high cash-back rates. Those benefits are great if you use them, but if your lifestyle changes or you stop traveling, paying for unused rewards is wasted money. 

Instead of canceling immediately, ask your issuer about a “product change.” This lets you switch to a no-fee version of the card while preserving your credit history. Most major issuers, like Chase and American Express, allow this. 

2. The Card Encourages Overspending

Some people keep credit cards “for emergencies” but end up treating every sale as one. If a particular card tempts you into debt, closing it could be the behavioral nudge you need to regain control. 

According to Bankrate , nearly 48% of Americans carry credit card debt month-to-month. If a card consistently drives up your balances and interest payments, removing it from your wallet can be a financially healthy move even if your credit score dips slightly in the short term. 

3. The Card Carries a History of Fraud or Poor Service

If a card has been repeatedly compromised, or if you’ve had ongoing issues with the issuer (unauthorized charges, difficult customer service), closing it might bring peace of mind. 

Be sure, however, to confirm that all balances and rewards are redeemed before closure once the account is closed, you can’t typically recover unclaimed points or cash back. 

4. You’re Simplifying or Consolidating Credit

If you’ve accumulated multiple cards over the years, managing payments and due dates can become confusing. Simplifying to just one or two cards you actually use and paying on time can help you stay organized  and protect against missed payments, which have a far bigger impact on your credit than account closures. 

Just make sure to close the newer or lesser-used accounts rather than your oldest one to protect your credit history. 

5. You’re Divorcing or Ending a Joint Account

If you share a joint credit card with a partner or family member, closing it can prevent future financial entanglements or liabilities. Joint users are equally responsible for debt, regardless of who made the purchases. Closing such accounts before things sour is a smart protective move. 

 

When You Should Not Close a Credit Card 

There are also strong reasons to keep a card open, even if you rarely use it. 

1. It’s Your Oldest Account

The age of your oldest credit line is crucial for maintaining a strong credit history. Closing your first credit card especially if it’s several years old can shorten your average credit age and eventually lower your score. 

Even if you don’t use it regularly, consider keeping the account open by making small, recurring purchases (like a streaming subscription or utility bill) and paying them off monthly. This keeps the account active and your history intact. 

2. You Need It to Maintain Low Credit Utilization

If you’re planning to apply for a mortgage, car loan, or even a new credit card soon, maintaining a low credit utilization rate can help you qualify for better terms. 

Closing a card before a major application could increase your utilization ratio, potentially dropping your score just when you need it strongest. As NerdWallet notes, even small credit score changes can influence interest rates, and those rate differences compound over time. 

3. It Offers Valuable Non-Cash Perks

Some cards provide extended warranties, purchase protection, or travel insurance automatically when you use them. Even if you’re not chasing rewards, these built-in benefits can be financially valuable especially for big-ticket purchases. 

4. It’s a No-Fee Card That Doesn’t Hurt to Keep

If the card doesn’t charge an annual fee, there’s rarely a downside to keeping it open. An unused, no-fee credit line quietly contributes to your credit score by keeping your total available credit higher. 

 

What to Do Before Closing a Card 

If you decide closing is the right call, treat it like a surgical procedure, deliberate and with the right follow-up. 

Step 1: Pay Off the Balance in Full 

You can’t close a credit card with an outstanding balance. Even after paying it off, check your account a few weeks later to confirm no trailing interest or small fees remain. 

Step 2: Redeem Your Rewards 

Many issuers wipe out unused points, miles, or cash-back balances once an account closes. Use them first, redeem for statement credits, gift cards, or transfers before requesting closure. 

Step 3: Contact the Issuer Directly 

Call customer service or use secure messaging through your online portal to request closure. Get written confirmation that your balance is zero and your account is marked “closed by consumer.” This matters if the issuer closes it instead, it might signal to future lenders that the account was shut down due to inactivity or issues. 

Step 4: Monitor Your Credit Report 

It may take a month or two for the closed account to reflect on your credit reports. You might want to check your free credit reports through AnnualCreditReport.com to verify that the status is accurate and no fraudulent activity occurred afterward. 

 

Alternatives to Closing a Credit Card 

If you’re torn between wanting to simplify and wanting to preserve your credit, there are middle-ground strategies: 

• Downgrade the Card: Ask to switch to a no-fee or lower-tier version. This keeps the account open but eliminates unnecessary costs.

• Lock or Freeze the Card: Some issuers let you freeze spending temporarily. This prevents use without canceling the account, this is helpful if overspending is your main concern.

• Cut Physical Access, Not the Line: Store the card somewhere safe or delete it from your digital wallets. Out of sight, out of temptation. These approaches allow you to preserve your credit history and utilization ratio while still achieving the financial discipline or simplicity you want. 

 

How Closing Affects Different Credit Scores 

Your score’s reaction to closing a card depends heavily on your broader credit profile: 

• If You Have Multiple Credit Lines
  The impact will likely be minimal. With plenty of available credit spread across accounts, losing one card won’t drastically alter utilization or average age.

• If You Have Limited Credit History
  The effect can be more noticeable. For younger consumers or those with only one or two cards, closing one might shorten credit history and raise utilization significantly. In that case, it’s usually better to keep the account open.
   
• If You’re Rebuilding Credit
  Maintaining older accounts shows lenders you can handle credit responsibly over time. Closing too early may hinder progress, especially if you’re aiming for a mortgage or auto loan in the near future.