Thinking about canceling a credit card? It might seem like a simple way to clean up your finances—but it can affect your credit score in ways that aren’t always obvious. Even if you’re not using the card, closing it could raise your credit utilization or shorten your credit history.
In this guide, we’ll break down exactly how closing a credit card can impact your credit score, when it might make sense to cancel, and how to avoid hurting your credit in the process. Whether you’re looking to simplify your wallet or cut out high fees, here’s what you need to know before you close that account.
What happens when you close a credit card?
Closing a credit card can affect your credit score, but the impact depends on your full credit profile. In general, here’s what can happen:
- Can increase your credit utilization ratio: You’ll have less total available credit, which can make your credit utilization look higher.
- May reduce average account age over time: Older accounts help your score, and closing them can eventually shorten your credit history.
- Won’t remove the account from your credit report right away: Closed accounts in good standing typically stay on your report for up to 10 years.
How Credit Scores Work
Your credit score is made up of five key factors. Here’s how they break down:
- Payment history (35%) – Whether you pay your bills on time. Late payments hurt your score more than almost anything else.
- Credit utilization (30%) – How much of your available credit you’re using. Lower is better—aim for under 30%, ideally under 10%.
- Length of credit history (15%) – The average age of your accounts. Older accounts show a longer track record of responsible use.
- Credit mix (10%) – Having different types of credit, like credit cards, student loans, or auto loans, helps show you can handle various obligations.
- New credit (10%) – Opening new accounts can temporarily ding your score, especially if you apply for several in a short period.
How Credit Cards Affect Your Credit Score
Credit cards play a big role in shaping your credit score—especially in these two areas:
On-Time Payments Build Trust
Your payment history is the biggest part of your score, and credit cards give you a monthly opportunity to show you’re responsible. One missed payment can stick around for years, so consistency is key.
Credit Limits Influence Utilization
The more available credit you have, the easier it is to keep your credit utilization ratio low. Let’s say you have $10,000 in total limits and carry a $2,000 balance. That’s a 20% credit utilization rate—which is healthy. But close a card with a $3,000 limit, and suddenly, you’re at 29%.
Should you close a credit card you don’t use?
Closing an unused card might sound like a good idea, but it can hurt your credit more than help it—especially if it’s one of your oldest accounts or has a high credit limit.
If the card doesn’t charge an annual fee, it’s usually better to keep it open. You can set up a small recurring charge and autopay to keep it active without any extra effort.
If fees are the issue, ask about downgrading to a no-fee version instead of canceling. That way, you keep the account history and available credit, both of which help your score.
When It Makes Sense to Cancel a Credit Card
Sometimes, closing a credit card is the right move. If the card charges a steep annual fee or a high interest rate, and you’re not using it, there’s no reason to keep paying for it.
It also makes sense to close a card if managing multiple accounts has become overwhelming. And if you’ve replaced the card with a better one—maybe a no-fee or higher-rewards option—shutting down the old one can simplify your finances.
When You Should Avoid Canceling a Credit Card
Before you cancel a card, timing matters. If you’re planning to apply for a mortgage, auto loan, or any other major financing soon, don’t risk a temporary credit score drop.
You’ll also want to keep the card open if it’s one of your oldest accounts, since that history helps your score. And if the card has a high credit limit, closing it could raise your credit utilization ratio more than you think.
How to Minimize Credit Score Impact
If you do decide to close a card, you can take steps to reduce the impact on your credit:
- Pay down existing balances to lower your credit utilization before closing.
- Keep your other credit cards open, active, and in good standing.
- If closing more than one account, space them out over time to soften the effect.
How to Properly Close a Credit Card
Don’t just cut up the card and call it a day. Take these steps to close it the right way:
- Use or redeem any remaining rewards.
- Pay off the full balance so the account can be closed in good standing.
- Contact the issuer and ask that the account be marked as “closed at consumer’s request.”
- Check your credit report after 30–60 days to make sure it’s been updated correctly.
Final Thoughts
Closing a credit card can be a smart financial move—but only if it fits into your bigger credit strategy. In some cases, keeping the account open quietly in the background can do more for your score than canceling it ever could.
The key is to weigh the short-term benefits against the long-term impact on your credit. If you’re going to close a card, do it with a plan—not on impulse.
Frequently Asked Questions
What happens to my rewards points when I close a credit card?
In most cases, you lose any unused rewards when you close a credit card—especially if it’s a points or airline card. Some issuers allow transfers or let you use points within a short window before closure, but not all do. Always redeem or transfer your rewards before closing the account.
Can I reopen a credit card after I close it?
Sometimes. Some credit card issuers allow you to reopen a recently closed account, especially if it was closed within the past few months and was in good standing. You’ll need to call customer service to ask—policies vary by issuer.
Will closing a credit card stop annual fees right away?
Usually, no. If your annual fee was just charged, closing the card may not automatically waive it. However, some issuers will refund the fee if you cancel within 30–60 days of the charge. Always ask if a refund is possible when you close the account.
Can closing a secured credit card hurt my score?
Yes, just like with unsecured cards, closing a secured credit card can impact your credit utilization and account age. If the card helped your credit and has no ongoing fees, it may be worth keeping open even after you’ve outgrown it.
Will my credit score improve if I close a card I never use?
Not necessarily. Closing an unused card won’t boost your credit score—and in many cases, it could lower it by increasing your credit utilization or reducing your credit history length. If the card has no fees and isn’t causing problems, keeping it open is usually better for your score.
