The short answer: closing a card usually hurts your credit score more than keeping it open costs you
Closing a credit card lowers your credit score in most cases, sometimes by 10 to 50 points or more. The damage comes from two things: your credit utilization ratio (how much of your available credit you're using) jumps when your total available credit shrinks, and your average account age may drop if the card is relatively new. The score hit is temporary — it fades over months — but it can affect your ability to borrow at good rates during that time.
If you're paying an annual fee and not using the card, closing it makes financial sense. If there's no annual fee, the math usually favors keeping it open and unused. The exception is if carrying the card tempts you to overspend, or if you're trying to reduce the number of accounts you manage.
Key Takeaways
- Closing a card reduces your available credit, which raises your credit utilization ratio and typically lowers your score by 10 to 50 points.
- If the card has no annual fee, keeping it open and unused costs you nothing and protects your score.
- If the card charges an annual fee you're not getting value from, closing it is worth the temporary score dip.
- The score damage from closing a card is temporary and usually recovers within three to six months if you keep other accounts in good standing.
- Before closing, check whether the card offers benefits (cash back, travel rewards, purchase protection) you're currently using on other cards.
How closing a card affects your credit score
Your credit score depends on five main factors. Closing a card directly damages two of them. Your credit utilization ratio — the percentage of your total available credit that you're currently using — typically makes up about 30 percent of your score. If you have $5,000 in available credit across all cards and you're carrying a $1,000 balance, your utilization is 20 percent. Close a card with $2,000 available credit, and your total available credit drops to $3,000, pushing your utilization to 33 percent. That ratio increase triggers a score drop.
The second factor is account age. Credit bureaus track both the age of your oldest account and the average age of all your accounts. Closing a card, especially a newer one, lowers that average. This factor matters less than utilization — it's about 15 percent of your score — but it still works against you.
The score hit is not permanent. As you pay down balances on remaining cards, your utilization ratio improves and your score recovers. Most people see the damage fade within three to six months if they keep other accounts in good standing.
When closing a card makes sense financially
Close a card if it charges an annual fee and you're not using the benefits enough to justify that cost. Common annual fees range from $25 to $450 or more for premium cards. If you opened a travel rewards card for a specific trip and won't use the perks again, paying $95 a year for a card you don't touch is waste. The temporary score hit is worth avoiding that recurring charge.
Before you close it, call the card issuer and ask whether they'll waive the annual fee. Many issuers will reduce or eliminate the fee for existing customers, especially if you've been with them for years or have a good payment history. If they refuse and you're certain you won't use the card, closing it is the right move.
Also close a card if keeping it open creates a genuine risk that you'll overspend. If you have a history of running up balances and you know this particular card tempts you, the psychological benefit of removing the temptation may outweigh the score damage. Your ability to stick to a budget matters more than a temporary credit score dip.
When keeping a card open is the better choice
If the card has no annual fee, keep it open. The cost to you is zero, and the benefit to your credit score is real. Use it once or twice a year — a small purchase you'd make anyway — and pay it off immediately. This keeps the account active and prevents the issuer from closing it for inactivity, which would have the same score impact as you closing it yourself.
Keep the card open if it's your oldest account or one of your oldest. Closing it would noticeably lower your average account age, and that damage compounds if you don't have many other old accounts. The older the card, the stronger the reason to keep it.
Keep it if you're planning to apply for a mortgage, car loan, or other major credit in the next six to twelve months. The score hit from closing a card can affect the interest rate you're offered. If you're not borrowing soon, the timing matters less.
The right order if you decide to close
If you've decided closing makes sense, do it strategically. First, transfer any rewards balance or points to another card if the program allows it. Some issuers let you move rewards between their cards; others don't. Ask before you close.
Second, pay off any remaining balance on the card. You can't close an account with an outstanding balance, and even if you could, you'd still owe the debt.
Third, call the card issuer directly. Do not close the account online if you can avoid it. Speaking to a representative gives you a chance to ask about fee waivers one more time, and it creates a record of your request. Ask them to note in your file that you requested the closure. Get the date and the representative's name.
Fourth, wait 30 days and check your credit report to confirm the account shows as closed at your request, not closed by the issuer. You can pull your credit report free once a year from each of the three bureaus at annualcreditreport.com. If it shows the wrong status, contact the bureau and the issuer to correct it.
What happens to rewards and benefits after you close
Once you close a card, you typically can't earn new rewards on it. Any rewards you've already earned usually stay in your account for a set period — often 30 to 90 days — and you can redeem them before the account closes. Some issuers let you redeem rewards after closure if you act quickly; others don't. Check your card's terms or call before you close.
Benefits like purchase protection, extended warranties, and travel insurance end when the account closes. If you were relying on a card's rental car insurance or baggage delay coverage, make sure another card you're keeping offers the same protection before you close.
Alternatives to closing if you want to reduce accounts
If your goal is simply to have fewer cards to manage, closing isn't your only option. You could downgrade to a no-annual-fee version of the same card. Many issuers offer this: you keep the account history and age, but you lose the annual fee and premium benefits. This preserves your credit score while simplifying your wallet.
You could also just stop using the card and let it sit. As long as there's no annual fee, it costs nothing and helps your score. If the issuer closes it for inactivity after a year or two, that's their action, not yours — and the score impact is the same either way, so you haven't lost anything by trying.
Frequently Asked Questions
Will closing a credit card remove it from my credit report?
No. A closed account stays on your credit report for seven years (for negative marks) or longer (for positive payment history). Closing the card doesn't erase it; it just changes the status from "open" to "closed." The account still counts toward your credit history and average account age during that time.
What if I close a card and the issuer reports it as "closed by issuer" instead of "closed by consumer"?
Contact both the issuer and the credit bureau to correct it. "Closed by issuer" can signal that the issuer closed it due to inactivity or missed payments, which looks worse to lenders than a closure you requested. Send a written dispute to the bureau and ask the issuer to update the status. This usually takes 30 days.
Can I reopen a card after I close it?
Sometimes. Many issuers will reopen a recently closed account if you call within 30 to 60 days and ask. After that window, reopening is harder or impossible. If you're unsure about closing, ask the issuer what their policy is before you make the call.
Does closing a card hurt my score if I have other cards with low balances?
Yes, but less severely. If you have multiple cards and your overall utilization is already low, closing one card raises your utilization less than if you only had one or two cards. The damage is real but smaller. If your utilization is high across all cards, closing one makes it worse.
Should I close old cards or new cards first?
Close new cards first if you must close something. Keeping your oldest account open protects your average account age. If you have multiple cards opened around the same time, the order matters less — focus instead on which one has an annual fee or which one you're least likely to use.