Why Closing a Credit Card Can Hurt You More Than You Think
Published by Speed Credit
Table of Contents
- Why People Close Credit Cards (And When It Makes Sense)
- How Closing a Credit Card Affects Your Credit Score
- When You Shouldn’t Close a Credit Card
- What to Do Instead of Closing a Card
- If You Really Need to Close It, Do This First
- Next Up: Is Checking Your Credit Score Bad?
Why People Close Credit Cards (And When It Makes Sense)
People close credit cards for all kinds of reasons:
- They paid off the balance and think they’re “done”
- They’re trying to simplify their finances
- They want to avoid an annual fee
- They’re afraid of overspending again
Sometimes it makes sense—especially if the card is costing you money or temptation. But most of the time, closing it can backfire.
How Closing a Credit Card Affects Your Credit Score
Here’s how it can hurt you:
- Utilization ratio goes up – You just lost available credit, so your balances take up a bigger percentage
- Average age of accounts drops – Especially if it was one of your oldest cards
- Less credit mix – If it’s your only revolving account, that’s a red flag
Result: your score could drop 10, 20, even 40+ points—without warning.
When You Shouldn’t Close a Credit Card
Don’t close it if:
- It’s your oldest card
- It has no annual fee and isn’t hurting you
- It’s your only card with a high limit
- You want to keep your utilization low
Letting it sit open with a small recurring charge and autopay can actually help your score over time.
What to Do Instead of Closing a Card
- Downgrade to a no-fee version – Many issuers offer this option
- Use it for a small bill – Like Netflix or your phone bill
- Set up autopay so you never miss a payment
- Store it in a safe place to avoid temptation without shutting it down
This keeps your credit line active, your score stable, and your history strong.
If You Really Need to Close It, Do This First
- Pay off the full balance (no residual interest)
- Use your other cards to bring your utilization below 10%
- Open a new no-fee card before closing to offset credit loss
- Ask the issuer if they’ll convert it instead of canceling
And always follow up a few weeks later to confirm it was closed in good standing.
Next Up: Is Checking Your Credit Score Bad?
Let’s settle this once and for all. Next, we’re breaking down the difference between hard and soft pulls—and the truth about checking your own score—in Is Checking Your Credit Score Bad?
