Canceling a credit card will lower your credit score, but the damage is temporary and often smaller than you might fear.
When you close a card, two things happen to your credit report. First, your available credit shrinks — if you had a $5,000 limit and you close that card, you now have $5,000 less credit available across all your accounts. Second, the card stays on your report for about 10 years, but it stops actively helping your score after a few months. The score drop is real, but it's not permanent, and it's often worth it if keeping the card costs you money or tempts you to overspend.
The size of the hit depends on how much of your available credit you were using. If you had that $5,000 card and rarely used it, closing it might drop your score 5 to 15 points. If you were carrying a balance on it, the drop can be larger — sometimes 25 to 50 points or more — because closing it raises your overall credit utilization ratio (the percentage of your available credit you're actually using). A person with $10,000 in total limits using $2,000 has a 20% utilization ratio; close a $5,000 card and that same $2,000 balance now represents 40% utilization, which scores lower.
Key Takeaways
- Closing a card reduces your available credit, which raises your credit utilization ratio and typically lowers your score by 5 to 50 points depending on how much you were using the card.
- The score drop is temporary — most of the damage recovers within a few months as long as you keep your remaining balances low.
- A closed card stays on your credit report for about 10 years, so it continues to show your payment history even after you close it.
- Closing a card makes sense if you're paying an annual fee, if the card tempts you to overspend, or if you're simplifying your finances — not if you're doing it to improve your score.
How the score recovers after you close a card
The initial drop happens within days of closing the card. But recovery starts almost immediately if you keep your remaining balances low. Most people see their score bounce back within 3 to 6 months, especially if they have other cards with zero or near-zero balances. The key is not to fill the credit space you just freed up by running up balances on your other cards.
The closed card itself doesn't disappear from your report. It shows up as "closed" or "inactive," and it still counts toward your credit history length — which is good for your score. What stops helping you is the available credit it represented. So if you close a card and then immediately max out another card to fill that gap, your score will stay depressed much longer.
When closing a card makes sense despite the score hit
A card is worth closing if it costs you money or if keeping it open costs you in other ways. An annual fee of $95 or $150 is a real expense, and if you're not using the card enough to earn back that fee in rewards or benefits, closing it is the right move financially — even if your score dips. The score recovers; the annual fee doesn't.
Closing a card also makes sense if it tempts you to overspend. If you have a card with a high limit and a history of running it up, closing it removes a source of debt. That's worth a temporary score drop. Your financial stability matters more than a number that will recover on its own.
Closing a card can also simplify your finances if you have too many accounts to manage. Fewer cards means fewer bills to track, fewer passwords to remember, and less opportunity to miss a payment. That peace of mind has real value.
When you should keep a card open instead
If the card has no annual fee and you're not tempted to overspend with it, keeping it open helps your score. An unused card with a zero balance is an asset to your credit profile — it adds available credit and shows you can manage credit responsibly without using it. The card issuer may close it for inactivity after a year or two, but you can prevent that by making a small purchase every few months and paying it off.
If you're planning to apply for a loan or mortgage in the next 6 to 12 months, closing a card right before you apply will hurt your chances. Lenders see a recent drop in available credit as a red flag. If you're not applying for credit soon, the timing matters less.
What happens to rewards and cash back when you close a card
Any rewards or cash back you've already earned usually stays in your account after you close the card — you can redeem it for months or even years afterward, depending on the card issuer's policy. But new rewards stop accumulating the moment the account closes. If you have a large balance of unused rewards, redeem them before you close the card, or check the issuer's website to confirm how long you have after closing to use them.
Some cards let you transfer rewards to another card you hold with the same issuer, or to a travel partner or cash account. Read the fine print before you close, or call the issuer to ask what happens to your rewards.
How to close a card the right way
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 incentive to keep it open — that's normal. If you're set on closing it, be clear and direct. Ask them to confirm the account is closed and ask them to send you written confirmation by mail or email.
After you close the card, check your credit report a few weeks later to make sure it shows as closed on your end. You can get a free copy of your credit report once per year from annualcreditreport.com, which is the official site run by the three major credit bureaus (Equifax, Experian, and TransUnion). If the card doesn't show as closed, call the issuer again.
Don't close multiple cards at once if you can avoid it. Closing one card at a time spreads out the score impact and gives your score time to recover between closures. If you have to close several cards, space them out over a few months.
The difference between closing a card and paying it off
Paying off a card and closing a card are two different things. You can pay off a balance and keep the account open — in fact, that's usually the better move for your score. Paying off the balance lowers your utilization ratio immediately, which boosts your score. Keeping the account open preserves your available credit and your credit history. Closing the account is the step that hurts your score.
If you have a balance on a card you want to close, pay it off first. Then wait a month or two to make sure the payment posts and your score stabilizes. Then close the account if you still want to. This order minimizes the damage to your score.
Frequently Asked Questions
How much will my score drop if I close a card?
The drop ranges from 5 to 50 points depending on how much credit you were using on that card and how much total available credit you have. A card you rarely used will cause a smaller drop than a card you carried a balance on. Most people recover most of the points within 3 to 6 months.
Will closing a card hurt my credit history?
No. The closed card stays on your report for about 10 years and continues to show your payment history, which is part of what makes up your credit score. Closing the card doesn't erase that history — it just stops the account from being active.
Should I close old cards or new cards?
If you have to close one, close a newer card rather than an old one. Older accounts help your score because they show a longer credit history. Closing a newer card has less impact on that part of your score. But if an old card has an annual fee and a new card doesn't, the fee matters more than the age.
Can I reopen a card after I close it?
Sometimes, but it depends on the issuer. Some will reopen a recently closed account if you call within a few weeks. Others treat a closed account as closed permanently and require you to apply again as a new customer. Call the issuer and ask — there's no harm in trying.
What if I close a card and then need to use it?
Once a card is closed, you can't use it for new purchases. If you think you might need the card later, don't close it. Instead, put it in a drawer and use another card. You can always close it later if you change your mind.