💳 Thinking of closing a credit card?
Maybe you don’t use it anymore. Maybe you’re simplifying. But before you cut that card up and close the account, here’s what you need to know:
❗Yes—Closing a Credit Card Can Hurt Your Credit Score
It might feel like a responsible move, but closing a credit card can actually backfire. That’s because of how your credit score is calculated.
Here are the three main reasons why:
1. 📉 It Lowers Your Total Available Credit
When you close a credit card, your overall credit limit drops. But if you still carry balances on other cards, your credit utilization ratio (the percentage of credit you’re using) goes up.
Higher utilization = lower score. Ideally, you want to keep it below 30%.
2. 🕒 It Can Shorten Your Credit History
If the card you’re closing is one of your oldest, your average age of accounts could drop. Since longer credit histories help your score, this could cause a small dip—especially if you don’t have many other accounts.
3. 💰 It Can Affect Your Credit Mix
If it’s your only credit card and you have loans but no other revolving credit, closing it may affect your credit mix—another small factor in your score.
✅ When Is It Okay to Close a Credit Card?
You might consider closing a card if:
- It has high annual fees you can’t justify
- You’re struggling with overspending
- It has high interest rates and you’ve paid off the balance
- You’ve already got a solid score and diverse credit history
💡 Pro Tip: Keep It Open, Use It Occasionally
If the card has no annual fee, your best bet might be to keep it open and use it once in a while (like for a small subscription). That way:
- You maintain your available credit
- Keep your utilization low
- Help your credit history age
Then, pay it off in full every month to avoid interest.
🎯 Final Thought
Closing a credit card won’t ruin your credit—but it can chip away at your score. Make the decision strategically.
Before you close any account, check your current utilization and credit mix. If keeping it open won’t hurt, it might actually help.
