Does Closing a Credit Card Hurt Your Credit?
5 Min Read | Last updated: January 7, 2025
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Closing a credit card account can negatively affect your credit score, but by how much? See how to decide whether you should close a credit card.
At-A-Glance
- Closing a credit card account could negatively impact your credit.
- That’s because closing a credit card account can affect the average age of accounts on your credit report, as well as your credit utilization ratio.
- If you need or want to close a credit card account, there can be ways to help minimize negative effects on your credit.
There may be valid reasons for wanting to close a credit card account. Maybe it’s an unused credit card with a high annual fee, or maybe the rewards offered by the credit card no longer align with your current lifestyle.
This article explains what could happen if you were to close a credit card account, ways to help reduce any negative effects, and how to decide whether to close the account or keep it open.
How Closing a Credit Card Impacts Your Credit
It can be important to understand that, for the most part, there are three ways that closing a credit card could negatively affect your credit score:
- It Could Raise Your Credit Utilization Ratio
- It Could Reduce the Average Age of Your Accounts
- It Could Reduce Your Credit Mix
Let’s look at all three of these factors now and the impact they could have on your score.
It Could Raise Your Credit Utilization Ratio
Closing a credit card could negatively impact your credit score by reducing your total available credit limit, which can ultimately increase your credit utilization ratio, a factor that could impact your credit score. The amounts owed on credit accounts is an important factor in your credit score, and your credit utilization ratio is an important part of this.1
To calculate your credit utilization ratio, you can add up the balances of your credit cards and divide them by your available credit limit across all the cards:
Total Credit Used / Total Available Credit = Credit Utilization Ratio
You can also calculate your credit utilization ratio across different accounts using the calculator below:
Your Credit Usage
| Card 1 Utilization | 0.00% | |
| Card 2 Utilization | 0.00% | |
| Total Balance | $0.00 | |
| Total Limit | $0.00 | |
| Overall credit utilization ratio |
0.00% |
Your utilization:
As an example, let’s say you have two credit cards and recently paid off the total balance on one of them. Now you’re wondering whether you should close the account.
Here’s a visual example of how closing the paid-off credit card account could affect your credit utilization ratio:
| Credit Limit | Credit Used | Credit Utilization Ratio |
|
|---|---|---|---|
| Card #1 | $2,000 | $1,500 | |
| Card #2 | $1,500 | $0 |
|
| Total | $3,500 | $1,500 | 43% |
Now, here’s a look at what would happen to your credit utilization ratio if you were to close Card #2:
| Credit Limit | Credit Used | Credit Utilization Ratio |
|
|---|---|---|---|
| Card #1 | $2,000 | $1,500 | |
| Total | $2,000 | $1,500 | 75% |
As you can see, using the same credit card limits and balance as before, closing the paid-off credit card may bring your total credit utilization ratio up to 75%, which is very high.
It Could Reduce the Average Age of Your Accounts
Average account age is considered in your length of credit history, another factor that impacts your credit score. Closing a credit card could reduce the average age of all accounts on your credit report, especially if it’s an account that has been open and in good standing for years.2 This means you could see a dip in your credit score if you close an account that you’ve had open for several years.
It Could Reduce Your Credit Mix
Your credit accounts, also known as credit mix, can also impact your credit score. This means that having different types of credit, including a car loan, mortgage, credit cards, and more could positively impact your score. Closing one credit card is unlikely to make a significant impact, but it’s important to keep in mind.3
When Should You Close a Credit Card Account?
The decision to close a credit card account should be made carefully, and the right answer for you may depend on your particular situation. Two factors you may want to consider:
- If the Card’s Annual Fee Is Too High
If the card has an annual fee, and rewards and benefits you no longer use, you might be tempted to cancel. Another alternative would be to contact your credit card issuer to see if you can “downgrade” to a version of the card with no annual fee. This could keep the account on your credit report, and you can no longer have to pay the annual fee.
- If Having Available Credit the Is Tempting You to Spend More
If having more available credit only tempts you to increase your spending, you may be able to eliminate the temptation by closing the card account.
For a more in-depth analysis of the reasons, you might want to keep or cancel your credit card, read “Should You Cancel Unused Credit Cards or Keep Them?”
How Do I Cancel My Credit Card Without Hurting My Credit?
While there’s no guaranteed way to close a credit card without damaging your credit score, there are some steps that you can take that could help minimize the impact. Here’s a look at some of them:
- Consider Your Total Credit Utilization Ratio
If you decide you must close a credit card account, one way to minimize the impact on your credit score is to keep your credit utilization rate to a minimum across all accounts. You can also keep your credit utilization ratio low by reducing your spending across your other credit cards. You may also want to consider asking for a credit limit increase on your other credit cards to help offset the impact of closing your credit card account.
- Lower Your Balances
Lowering your balances can help you to maintain a low credit utilization ratio. It can also reduce the amount of interest you’re charged. Consistent, on-time payments also reflect well on your credit report and can help increase your credit score.
- Close the Right Credit Card
If you’re able to choose which card account to close, you may want to try to close the account with the lowest credit limit. That way you won’t shave off a large portion of your total available credit limit, which can help your credit utilization ratio. It can also help to close the newest account, as it may have less of an effect on your account history.
The Takeaway
The exact impact of closing a credit card can be hard to quantify, and it may depend on a number of factors, including your overall credit report. If you’re planning to close a credit card, there are steps that you can take to minimize negative effects on your credit score and help you recover any lost points over time.
1,2,3 “Does Closing a Credit Card Hurt Your Credit?,” Experian
Michael Grace is a personal finance and technology freelance writer based in New York.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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