Canceling a credit card has real costs to your credit score, so the decision depends on why you want to close it
Closing a credit card lowers your credit score in two ways: it reduces the total credit available to you, and it removes a payment history from your record. The damage is usually temporary—your score recovers over months—but it can cost you if you're about to explore for a mortgage, car loan, or another card. Before you cancel, decide whether the card's annual fee, interest rate, or rewards structure is actually the problem, or whether you're closing it for a reason that won't change if you switch cards instead.
The best candidates for cancellation are cards you never use and don't plan to use, cards with annual fees you can't justify, or cards from issuers with poor customer service. Cards worth keeping open are ones with no annual fee (even if you don't use them), cards that help you build credit history, and cards with rewards you actually redeem. If you're closing a card because the interest rate is too high, you likely have a different problem—high-interest debt—and closing the card won't solve it.
Key Takeaways
- Closing a credit card reduces your available credit and can lower your score by 10 to 50 points, depending on how much credit you're losing and how much you currently owe.
- Cards with no annual fee cost nothing to keep open, so closing them for inactivity alone usually hurts you more than it helps.
- If you're closing a card because of high interest rates or overspending, the real issue is your debt or spending habits, not the card itself.
- The best time to close a card is when your credit score is strong, you're not explore for new credit soon, and you've paid off any balance on that card.
- Downgrading to a no-annual-fee version of the same card preserves your account history and credit limit without the fee.
How closing a card affects your credit score
Your credit score depends partly on your credit utilization ratio—the percentage of your total available credit that you're currently using. If you have $10,000 in total credit limits across all cards and you owe $2,000, your utilization is 20 percent. When you close a card with a $5,000 limit, your total available credit drops to $5,000, and the same $2,000 debt now represents 40 percent utilization. Credit bureaus see higher utilization as riskier, so your score drops.
Closing a card also removes its payment history from your credit report. If the card has been open for years and you've paid it on time, that history disappears. The impact is smaller if the card is newer or if you have other cards with long histories, but it still counts against you. The damage is usually 10 to 50 points depending on your overall credit profile, and it fades as the closed account ages off your report (after seven years, it stops affecting your score entirely).
The timing matters. If you're planning to explore for a mortgage, car loan, or another credit card within the next six months, closing a card now will lower the score lenders see. If your score is already below 700 or you're carrying high balances, the impact is larger. If your score is above 750 and you have low balances, the damage is usually temporary.
When closing a card makes sense
Close a card if it has an annual fee you can't justify and the issuer won't waive it. Call the card's customer service number and ask them to waive the fee before you decide to close it—many issuers will do this for customers with good payment history, especially if you've been a cardholder for years. If they refuse and the fee is $95 or more, closing may be worth the credit score hit.
Close a card if you're not using it and you don't trust yourself not to use it. If the card is a temptation to overspend, or if you've had fraud issues with that issuer, closing it removes the risk. But if you're closing it straightforward because it's sitting unused, keeping it open costs you nothing (assuming no annual fee) and helps your credit score.
Close a card if the issuer has poor customer service or has treated you unfairly. If you've had disputes with the company, been charged unauthorized fees, or had trouble reaching support, moving your business elsewhere is reasonable. Document any issues before you close the account in case you need to dispute charges later.
When keeping a card open is the better choice
Keep any card with no annual fee open, even if you never use it. The card costs you nothing, and closing it only hurts your credit score. Set a small recurring charge on it (like a streaming service) and pay it off monthly if you're worried the issuer will close it for inactivity. Most issuers won't close accounts for inactivity alone, but some will after 12 to 24 months of no activity.
Keep your oldest card open. Your average age of accounts is part of your credit score. Closing your oldest card lowers that average and damages your score more than closing a newer card would. If your oldest card has an annual fee, call and ask to downgrade it to a no-fee version instead of closing it.
Keep cards that offer rewards you actually use. If you have a card that earns cash back or points and you redeem them regularly, the rewards offset any annual fee and the card is working for you. Closing it means losing future rewards on that card's category (groceries, gas, travel, etc.).
Steps to take before you cancel
Pay off the full balance on the card before you close it. If you close a card with an outstanding balance, you still owe the debt and you'll still pay interest, but you lose the ability to make new charges on that card. You'll have a closed account with a balance, which looks worse to lenders than an open account with a balance.
Check your credit report to see if the card is reporting correctly. Go to annualcreditreport.com (the only free, official source) and pull your report from all three bureaus. Make sure the card shows a $0 balance and on-time payments before you close it. If there are errors, dispute them with the bureau before you close the account—it's harder to fix errors after the account is closed.
Redeem any remaining rewards or points on the card. Once you close the account, you may lose access to rewards you haven't used yet. Some issuers let you redeem after closing, but others don't, so check your card's terms or call customer service to confirm.
Transfer any automatic payments or subscriptions to another card. If you have recurring charges on the card (utilities, insurance, subscriptions), update them to a different card before you close the account. Missed payments due to a closed card will damage your credit score.
How to close a credit card
Call the customer service number on the back of your card. Tell them you want to close the account. They may ask why you're closing it or offer to waive an annual fee or lower your interest rate to keep you as a customer—listen to the offer, but don't let it pressure you into keeping a card you don't want.
Ask the representative to confirm that the account is closed and that the balance is $0. Request a confirmation number and write down the date and the representative's name. Some issuers will send a written confirmation; ask them to mail or email it to you.
Follow up by checking your credit report 30 to 60 days later. The closed account should appear on your report with a status of "closed by consumer" or "closed at consumer's request." If it shows as "closed by creditor" or has an outstanding balance, contact the issuer to correct it.
Alternatives to closing a card
If the card has an annual fee, call and ask to downgrade to a no-fee version of the same card. Many issuers offer a basic version of their premium cards without the annual fee. Downgrading keeps your account open, preserves your credit history, and eliminates the fee. Your credit limit usually stays the same.
If you're closing the card because you overspend on it, freeze the card instead of closing it. Put it in a drawer or ask the issuer to temporarily suspend it. You keep the account open and active, but you can't use it. This protects your credit score while removing the temptation to charge.
If the interest rate is too high, ask for a lower rate instead of closing the card. Call customer service and explain that you've been a good customer and ask them to reduce your APR. They may say no, but many issuers will negotiate, especially if you have a strong payment history or competing offers from other cards.
Frequently Asked Questions
How much will my credit score drop if I close a card?
The drop is usually 10 to 50 points and depends on how much credit you're losing and how much you currently owe. If you're closing a card with a $5,000 limit and you have $20,000 in total credit, the impact is larger than if you're closing a card with a $500 limit. The damage is temporary—your score recovers over months as the closed account ages.
Will closing a card hurt me if I'm not explore for credit soon?
The score drop matters less if you're not planning to borrow money in the next six months. Your score recovers gradually, and lenders only see your score at the moment you explore. If you're closing a card now and not explore for a mortgage or loan for a year, the timing works in your favor.
Can I reopen a card after I close it?
Some issuers will reopen a closed account if you ask within 30 to 60 days, but they're not required to. If you think you might want the card back, ask the representative before you close it whether reopening is possible. If you close it and change your mind, call back and ask—the worst they can say is no.
What happens to my rewards points if I close the card?
Most issuers let you redeem rewards after closing, but some don't. Check your card's terms or call customer service before you close to confirm. If the issuer won't let you redeem after closing, redeem everything before you call to close the account.
Should I close old cards or new cards first?
Close newer cards first if you have to close any. Your oldest cards help your credit score by raising your average account age. Closing a card you've had for 15 years hurts your score more than closing one you've had for two years, so prioritize closing the newer ones.