Can Closing Credit Card Accounts Hurt Your Credit?

30 August 2025

Credit cards. Love them or hate them, they’re part of modern financial life. They offer convenience, rewards, and if used wisely, they can boost your credit score. But what happens when you decide to close a credit card? Maybe you're trying to simplify your finances. Or maybe you’re tired of paying that sneaky annual fee. Either way, it seems harmless, right?

Well… not always.

Believe it or not, closing a credit card—even if it's old or unused—can hurt your credit score. Yep, you read that right. Let’s walk through the messy maze of credit scores and figure out why something as simple as closing a card can cause a ding on your financial reputation.

Why Would You Want to Close a Credit Card Anyway?

Let’s be honest—credit cards aren’t everyone’s best friend. Maybe you’ve got a drawer full of plastic you never use. Or maybe you’re trying to minimize temptation (because that 70% off shoe sale is calling your name). People close credit cards for all sorts of reasons:

- High annual fees that eat into your budget
- Not wanting to juggle too many accounts
- Reducing the temptation to spend
- Switching to a card with better rewards
- Concerns about fraud on rarely used accounts

These are all valid reasons. But just because it feels right doesn’t mean it won’t come with consequences.

How Credit Scores Actually Work

To understand how closing a card can hurt your score, we need to peek behind the curtain of how credit scores are calculated. Most lenders in the U.S. use the FICO score, which breaks down like this:

- 35% Payment History
- 30% Amounts Owed (Credit Utilization)
- 15% Length of Credit History
- 10% Credit Mix
- 10% New Credit

Keep this pie chart in mind—because closing a credit card can affect several slices of this pizza.

Credit Utilization: The Silent Score Killer

Here’s where things get tricky. One of the biggest components of your credit score is credit utilization—the percentage of your total available credit that you’re actually using.

For example, suppose you have two cards:
- Card A: $5,000 limit, $1,000 balance
- Card B: $10,000 limit, $0 balance

In total, you have $15,000 in available credit and $1,000 in use. That’s a utilization rate of about 6.7%, which is great!

But now let’s say you close Card B because you never use it. You just chopped your total credit from $15,000 to $5,000. Now your utilization jumps to 20% overnight (same $1,000 balance, but less total credit). That’s still decent—but not as stellar. And credit scoring models might ding you for it.

Little changes, big impact.

Length of Credit History: Older is Better

Ever heard the saying, “The older, the wiser”? Turns out, credit bureaus agree. The age of your credit accounts can boost your score significantly.

Your credit score looks at the average age of all your credit lines, as well as the age of your oldest account. Closing an old credit card doesn’t just cut available credit—it could also lower the average age of your accounts. If that closed card was your very first one? Ouch. That one bites.

Now, here’s the kicker: Even after closing an account, it can stay on your credit report for up to ten years. So the age will still technically count—but only for a while.

Credit Mix and New Credit: The Supporting Cast

Credit mix and new credit aren’t as heavily weighted, but they still play a role. Lenders like to see that you can handle a variety of credit types—credit cards, car loans, mortgages, etc.

If credit cards are the only kind of debt you carry, closing one could limit your credit mix. And if you’re regularly closing cards and opening new ones? That pattern might look risky to lenders.

When Closing a Credit Card Won’t Hurt Your Score

Now, before you panic and start hugging all your credit cards like long-lost relatives, know this: Closing a credit card doesn’t always hurt your score. In fact, in some cases, it might do very little harm or even help.

Here are a few safe scenarios:

- You’re Closing a Newer Card

Newer cards haven’t had time to establish history. If you close one and it doesn’t drastically change your utilization, you’re likely fine.

- You Have Lots of Available Credit

If your utilization is consistently low and you have plenty of other open credit, losing one card won’t hurt much.

- It’s a Joint Account You No Longer Want

Sometimes life changes—divorce, financial disagreements, or simply wanting independence. Closing a joint card may be the right move even if it causes a slight score drop.

- The Fee Just Isn’t Worth It

If an annual fee is draining your wallet and you’re not getting enough benefits, it might be worth a temporary dip in your credit score to cut your losses.

What You Can Do Before Closing a Card

Alright—so you’ve made up your mind. That card’s gotta go. But before you snip it in half, here are a few smart steps you can take:

1. Pay Off the Balance

This might sound obvious, but many people forget—just because you close a card doesn’t mean the balance disappears. Always pay off the full amount before closing to avoid fees and interest.

2. Ask for a Downgrade

Rather than canceling a card, see if your issuer can downgrade it to a no-fee version. That way, you can keep the credit history and limit without paying extra.

3. Check Your Utilization

Do the math. If closing the card will push your utilization above 30%, it’s probably best to hold onto it a bit longer—or pay down other balances first.

4. Time It Right

If you’ve recently applied for a loan or are planning to in the near future—think car, home, or student loan—wait to close your credit card. A small dip in your score could hurt your loan terms or approval chances.

5. Monitor Your Credit

Always, always check your credit score before and after making changes. You can use free tools like Credit Karma or request an official report at AnnualCreditReport.com.

Should You Ever Keep a Card Just for Your Score?

This is a question that pops up a lot. Should you really keep a card open that you don’t use—just to keep your score high?

Maybe.

It depends on your financial goals. If you’re gunning for that excellent credit tier (think 800+), then yes, every point counts. That old credit card you forgot about might be doing more work behind the scenes than you think.

But also—don’t let a credit score rule your life. If holding that card is costing you money, mental energy, or stress, ditch it. Your financial well-being is more than three numbers.

Alternatives to Closing a Card

So if canceling isn’t the ideal move, what else can you do?

- Use it Occasionally: Put a small, recurring charge—like Netflix—on the card and pay it off monthly. That way it stays active, your score stays happy, and you barely notice it.
- Switch to a No-Fee Card: Many issuers let you change products without affecting your credit history. It’s like trading in an SUV for a gas-sipping hatchback—same road, less cost.
- Consolidate Balances Before Closing: If you’ve got balances across multiple cards, consider paying them down or consolidating before closing anything. Less debt = more peace of mind.

Final Thoughts: It’s a Balancing Act

So, can closing credit card accounts hurt your credit?

Yeah, it can. But does it always?

Nope.

It really comes down to your personal situation—your credit mix, utilization, history, and financial goals. The important thing is to make informed decisions. Don’t just close a card out of frustration or impulse. Think it through. Weigh the pros and cons. Understand how it fits into your bigger financial picture.

And remember—your credit score is just a tool. A useful one, sure. But not the only marker of financial health. What’s more important is that you’re in control of your money—not the other way around.

Use your credit wisely, close accounts thoughtfully, and keep that score climbing.