Closing a credit card has real costs to your credit score, but sometimes those costs are worth paying

Closing a credit card will lower your credit score in most cases. The damage comes from two places: your credit utilization ratio (the percentage of your total credit limit you're using) jumps up immediately, and your average account age drops if the card you're closing is older than your other accounts. How much your score falls depends on how much credit you're using overall and how old the card is. A single closed card might cost you 5 to 15 points if you're carrying balances elsewhere, or 20 to 50 points if the card was one of your oldest accounts.

Whether that cost is worth it depends on why you want to close the card. If you're closing it to stop overspending, to escape a high annual fee, or because the card no longer fits your needs, the score hit is usually temporary and the benefit is real. If you're closing it because you think it will help your credit or because you're not using it, you're probably making a mistake.

Key Takeaways

  • Closing a card raises your utilization ratio and lowers your average account age, both of which reduce your credit score by 5 to 50 points depending on your situation.
  • The score damage is usually temporary—most of it recovers within three to six months as you pay down balances and the account history remains on your report for seven to ten years.
  • Close a card if you're paying an annual fee you don't want, if keeping it open tempts you to overspend, or if the rewards no longer match your spending—not because you think it will help your credit.
  • Before closing, transfer any balance to another card, pay off the full statement balance, and call the issuer to confirm the account will report as "closed by consumer" rather than dormant.
  • Leaving a card open and unused costs nothing and preserves your credit history, so closing should be an active choice, not a default.

How closing a card damages your credit score

Your credit utilization ratio is the total balance you owe divided by your total credit limit across all cards. If you have three cards with $10,000 limits each ($30,000 total) and you owe $6,000 across them, your utilization is 20 percent. If you close one of those cards, your total limit drops to $20,000, and your utilization jumps to 30 percent—even though you haven't borrowed any more money. Credit scoring models treat higher utilization as higher risk, so your score drops.

The second hit comes from account age. Credit bureaus track the average age of all your open accounts. If you close an old card, that average drops. A card that's been open for 15 years carries more weight in this calculation than a card that's been open for two years. Closing the older card hurts more than closing a newer one.

The closed account itself stays on your credit report for seven to ten years (depending on whether it was in good standing), so the damage is not permanent. Your score will recover as you pay down balances and as other accounts age. Most people see their score return to near its previous level within three to six months.

When the score hit is worth the cost

Close a card if you're paying an annual fee and you don't use the card enough to justify it. A $95 annual fee costs you real money every year. The credit score damage is temporary; the fee is not. Calculate whether the card's rewards or benefits offset the fee. If they don't, closing is the right move.

Close a card if keeping it open makes you overspend. Some people find that having available credit tempts them to carry balances they wouldn't otherwise carry. If you know yourself well enough to recognize this pattern, closing the card removes the temptation and protects your finances. The temporary score hit is a small price for breaking a spending habit.

Close a card if the rewards structure no longer matches how you spend. If you opened a restaurant rewards card but you've stopped eating out, or a gas card but you switched to an electric vehicle, the card is no longer earning its place in your wallet. Closing it makes sense. You can always open a different card later if your spending changes again.

Close a card if the issuer has raised the interest rate, cut your credit limit, or changed the terms in a way that no longer works for you. These changes are often signs that the issuer no longer values you as a customer, and staying open doesn't help your relationship with them.

When you should keep a card open instead

Keep a card open if you're not paying an annual fee and you're not overspending because of it. The cost of keeping it open is zero. The benefit to your credit score is real—the older the card, the bigger the benefit. An unused card with no annual fee is a free boost to your credit history.

Keep a card open if it's one of your oldest accounts. Closing your oldest card does the most damage to your average account age. If you have newer cards you could close instead, close those first. If this is your oldest card and you have no other reason to close it, the score damage alone probably isn't worth it.

Keep a card open if you're trying to improve your credit score or if you're about to apply for a mortgage, car loan, or other credit. The timing of a closed account matters. Closing a card right before a major credit application can lower your score at the exact moment a lender is reviewing it. If you're planning to borrow money in the next six months, wait until after the loan closes to close the card.

The right way to close a credit card

Before you call the issuer, pay off any balance on the card. You can't close an account with an outstanding balance, and even if the issuer allows it, you'll still owe the debt and will continue to pay interest. Bring the balance to zero.

If you've transferred a balance from another card to this one, make sure the transfer is complete and the old card's balance is truly paid off. Some balance transfers take a few days to post. Check your statement online to confirm.

Call the card issuer's customer service number on the back of your card. Tell them you want to close the account. They may ask why, and they may offer you a lower annual fee or other incentives to keep it open. Decide in advance whether you'd accept a lower fee. If you would, listen to their offer. If you wouldn't, politely decline and ask them to close the account.

Ask the issuer to confirm that the account will report to the credit bureaus as "closed by consumer" (meaning you closed it) rather than "dormant" or "inactive." This distinction matters because accounts closed by the consumer are treated differently in some scoring models. Get a confirmation number for the closure.

After the account closes, check your credit report 30 to 60 days later to confirm the closure was reported correctly. You can view your credit report free once per year at annualcreditreport.com, which is the official site run by the three major credit bureaus (Equifax, Experian, and TransUnion).

What happens to your credit after you close a card

Your credit score will drop within a few days of closing the account. The drop is usually largest in the first month. After that, the damage stabilizes and then slowly improves as you pay down any remaining balances and as time passes.

The closed account stays on your credit report for seven to ten years. During that time, it continues to count toward your average account age (though with less weight than an open account). This is why closing an old card is less damaging in the long run than closing a new card—the old account's history remains visible to lenders even after it's closed.

If you closed the card because you were overspending, make sure you don't open a new card to replace it. Opening a new account will also lower your score (because the new account has no history), and it defeats the purpose of closing the old one. If you need a card for emergencies or everyday purchases, keep one of your existing open cards active instead.

Alternatives to closing a card

If you're closing a card mainly because you're not using it, consider keeping it open instead. Make one small purchase per year (a coffee, a subscription, a tank of gas) and pay it off immediately. This keeps the account active without costing you anything. The card issuer is less likely to close it for inactivity, and you preserve your credit history.

If you're closing a card because of an annual fee, call the issuer first and ask for a fee waiver. Many issuers will waive the annual fee for a year or two if you ask, especially if you've been a long-standing customer. This is a free conversation—there's no downside to asking.

If you're closing a card because you're overspending, consider asking the issuer to lower your credit limit instead. A lower limit reduces the temptation to overspend without closing the account and damaging your credit score. You can always ask for the limit to be raised later if your situation changes.

Frequently Asked Questions

Will closing a credit card hurt my credit score?

Yes, closing a card typically lowers your score by 5 to 50 points depending on how old the card is and how much credit you're using overall. The damage is usually temporary and recovers within three to six months as you pay down balances. The closed account remains on your report for seven to ten years, so the long-term impact is smaller than the short-term hit.

Should I close old credit cards to improve my credit?

No. Closing old cards damages your credit score because it lowers your average account age. Old accounts are valuable to your credit history. If you're not paying an annual fee and you're not overspending, keeping old cards open costs nothing and helps your score. Close newer cards first if you must close something.

What if the card issuer closes my account instead of me closing it?

If the issuer closes your account for inactivity or non-payment, the damage to your credit score is similar to closing it yourself, but the account will report as "closed by creditor" rather than "closed by consumer." This distinction can matter in some scoring models. To avoid issuer-initiated closure, use your cards occasionally and pay all bills on time.

Can I reopen a credit card after I close it?

Some issuers will reopen a recently closed account if you call within a few days or weeks. Others will not. If you think you might want the card back, ask the issuer about their policy before you close it. If you want to use that card company again after a longer period, you can always apply for a new card, though you'll be treated as a new applicant and may not get the same terms.

Does closing a card affect my ability to borrow money?

Yes, temporarily. Closing a card lowers your credit score, which can affect your interest rates and approval odds on new loans for the next few months. If you're planning to apply for a mortgage, car loan, or other major credit, close cards after the loan closes, not before. Wait at least six months between closing a card and applying for significant new credit.