Closing an unused card usually hurts your credit score more than keeping it open costs you
The instinct to close a card you don't use makes sense — why keep an account open if you're not using the rewards or benefits? But closing it typically damages your credit in two ways: it shrinks your total available credit (which raises your credit utilization ratio), and it removes an account from your credit history. Both of these changes lower your score, sometimes by 10 to 50 points depending on how old the card is and how much credit you have elsewhere.
The annual fee is the real decision point. If the card has no annual fee, the math is simple: leaving it open costs you nothing and helps your score. If it charges an annual fee, you need to weigh that cost against the credit score damage from closing it. For most people, the score damage outweighs a modest annual fee, but that changes if the fee is high or your credit is already fragile.
Key Takeaways
- Closing a card reduces your available credit and can lower your credit score by 10 to 50 points, even if you have no balance on it.
- A card with no annual fee costs nothing to keep open and should almost always stay open for the credit score benefit.
- A card with an annual fee is worth closing only if the fee is high enough that the credit damage is worth paying to avoid it.
- If you want to close a card anyway, pay off any balance first, then contact the issuer directly by phone to request closure.
- The credit score damage from closing a card is temporary — it typically recovers within three to six months if you keep other accounts in good standing.
How closing a card affects your credit score
Your credit score depends partly on credit utilization — the percentage of your available credit that you're actually using. If you have $10,000 in available credit across all your cards and you're carrying a $2,000 balance, your utilization is 20%. When you close a card with a $5,000 limit, your available credit drops to $5,000, and that same $2,000 balance now represents 40% utilization. Higher utilization signals risk to lenders, so your score drops.
The second hit comes from account age and history. Credit bureaus track how long you've had each account open. Older accounts help your score more than newer ones. When you close an account, it eventually falls off your credit report entirely (after seven years of inactivity), but in the meantime it stops actively helping you. If the card you're closing is one of your oldest accounts, the damage is larger.
The timing of the damage matters too. The score drop happens immediately when you close the account, but it's not permanent. If you keep your other accounts in good standing — paying on time, keeping balances low — your score typically recovers within three to six months.
When the annual fee makes closing worth it
If your card charges an annual fee and you're not using the card or its benefits, the fee is real money leaving your account every year. The question is whether that fee is large enough to justify the credit score damage.
A card with a $95 annual fee (common on premium travel cards) might be worth closing if you're not using the travel credits or other perks that offset the cost. But closing it will probably cost you 10 to 30 points on your credit score. If your score is above 750, that damage is usually temporary and worth avoiding the fee. If your score is below 650, the damage is more serious, and you might want to keep the card open even if you're paying the fee.
Before you close a high-fee card, contact the issuer and ask if they'll downgrade it to a no-fee version of the same card. Many issuers offer this option — you keep the account open (preserving your credit history and available credit), but you lose the premium benefits and the annual fee. This is the best outcome if it's available to you.
Cards with no annual fee should stay open
If the card has no annual fee, the cost of keeping it open is zero. The only reason to close it would be if you're worried about fraud risk or if you genuinely want to simplify your wallet. Neither of those reasons is strong enough to outweigh the credit score benefit.
Keeping a no-fee card open takes almost no effort. You don't have to use it. You don't have to check the balance. You can literally ignore it. Some people make a small purchase on it once or twice a year just to keep the account active in the issuer's system, but even that isn't required — the account stays open as long as you don't close it.
The credit benefit compounds over time. The longer an account stays open, the more it helps your score. A card you opened five years ago and haven't touched is more valuable to your credit than a new card you use every day.
How to close a card if you decide to
If you've decided the annual fee or another reason makes closing the right choice, follow these steps in order:
- Pay off any balance. If you have a balance on the card, pay it in full before you close it. Closing a card with a balance can damage your credit more severely than closing a paid-off card.
- Redeem any remaining rewards. If the card has points, miles, or cash back sitting in the account, use them before you close it. Once the account is closed, you may lose access to those rewards.
- Call the issuer directly. Don't close the account online or through the app if you can avoid it. Call the customer service number on the back of the card and ask to speak with someone about closing the account. This creates a record of your request.
- Confirm the closure in writing. After you close the account by phone, send a follow-up email or letter to the issuer asking them to confirm the account is closed and requesting written confirmation. Keep this confirmation.
- Check your credit report. A few weeks after closure, check your credit report (free at annualcreditreport.com) to confirm the account shows as closed. It should still appear on your report for seven years.
What happens to your credit after you close a card
The damage to your score is immediate, but it's not permanent. Most of the drop comes from the change in your credit utilization ratio, which is recalculated every time your credit report is pulled. As soon as you close the card, your utilization goes up (assuming you have any balance on other cards). But if you pay down those balances or open a new card with available credit, your utilization drops again and your score recovers.
The second part of the damage — the loss of account history — is slower to recover from. The closed account stays on your credit report for seven years, but it stops actively helping your score after a few months. However, if you have other old accounts still open, they continue to help you. The overall impact depends on how many other accounts you have and how old they are.
If you're planning to apply for a mortgage, car loan, or other major credit in the next few months, closing a card right before you apply is a bad idea. The temporary score drop can affect your interest rate. If you're not planning to borrow, the timing is less critical.
Alternatives to closing a card
Before you close a card, consider these options:
Downgrade to a no-fee version. If the card issuer offers a no-annual-fee card in the same family, ask to switch. You keep the account open and the credit history, but you lose the annual fee and premium benefits.
Use it occasionally. Some people keep unused cards open by making a small purchase every few months — a coffee, a gas fill-up, something that costs a few dollars. This keeps the account active in the issuer's system and shows the card is being used, which can help your credit.
Accept the annual fee. If the card is old or if you have limited other credit, the credit score benefit of keeping it open might be worth more than the annual fee. Run the math: if the fee is $95 and closing it would drop your score by 30 points, and a 30-point drop would cost you 0.25% more in interest on a mortgage or car loan, the fee might be the cheaper option.
Leave it alone. The simplest option is to do nothing. Put the card in a drawer, forget about it, and let it help your credit for free. You're not required to use a card to keep it open.
Frequently Asked Questions
Will closing a card hurt my credit if I have no balance on it?
Yes, closing a card hurts your credit even with a zero balance because it reduces your available credit and removes an account from your credit history. The damage is usually 10 to 50 points depending on the card's age and your other accounts. The score typically recovers within three to six months.
How much does a credit score drop when you close a card?
The drop varies based on the card's age, your total available credit, and how many other accounts you have. Closing an old card with a high limit usually causes more damage than closing a new card with a low limit. Most people see a drop of 10 to 50 points, but it's temporary.
Is it better to close a card or let it sit unused?
Letting it sit unused is almost always better. An unused card with no annual fee costs you nothing and helps your credit. Closing it damages your score and provides no benefit. Only close a card if it has a high annual fee you don't want to pay.
Can I reopen a card I closed?
It depends on the issuer and how long ago you closed it. Some issuers will reopen a recently closed account if you call and ask. Others treat a closed account as a new application if you want to open it again. Call the issuer to ask, but don't count on it being possible.
Should I close old cards or new cards?
Close newer cards if you must close something. Older cards help your credit more because they show a longer history of responsible credit use. If you're going to close a card anyway, closing a newer one minimizes the damage to your score.