How to close a credit card without hurting your credit score

You can choose to close a credit card for many different reasons. Maybe you want to simplify your personal finances. Or, perhaps you want to avoid an upcoming annual fee on a card you no longer use. Maybe you want to remove the temptation to spend by having one less card in your wallet, especially if you used a debt consolidation loan to pay down your credit cards.

Before closing a credit card, it’s important to keep in mind that your credit score may take a dip. However, with careful planning, it’s possible to minimize the impact.

How to cancel a credit card without hurting your credit score

Your credit score could take a dip when you cancel a credit card. However, you may be able to reduce the impact by following these steps.

Don’t close your oldest card. If possible, try not to close your oldest credit card. Doing so could affect the average age of your accounts, which is a factor credit-scoring companies use when calculating your credit score.^[1]
Pay your bills on time before canceling. Your payment history also impacts your credit score. A closed account in good standing remains on your credit report for 10 years after it’s closed. So, check your account status and catch up on any payments before shutting down the card.^[1]
Pay down or limit use of other credit cards. Canceling a card lowers your available credit and can lead to a higher utilization rate, but that’s only true if your overall balance stays the same. Before you cancel your card, consider paying down your other cards, too. At the very least, try limiting your credit card usage, which helps minimize an increase to your utilization rate.^[1]
Make early payments on your other credit cards. Credit utilization depends on the balance reported to the credit bureaus. Ask your credit card issuer when it reports balances, and pay off yours before that date to maintain a low reported utilization rate.^[1]

How canceling a credit card impacts your credit history

The length of your credit history accounts for about 15% of your FICO^®Score. Generally, keeping your accounts open longer will help lengthen your credit history, which can help boost your credit score. When you close a credit card, your credit score may temporarily dip because the closure lowers the average age of your accounts. However, your score should rebound if you continue to make timely payments on other lines of credit.

Your payment history—which is different from credit history—also impacts your credit score. A closed account in good standing can remain on your credit report for 10 years after you close it. So, you should consider your account status before canceling the card. An account that’s in “good standing” means it doesn’t have a history of missed or late payments. On the other hand, if you had late payments, those entries can remain on your credit reports for up to seven years—even if you close the account.^[1][3]

How closing a credit card affects credit utilization

Closing a credit card can lead to a higher credit utilization ratio and a lower credit score. Credit utilization is an important factor when determining a credit score, including the amount of debt owed which makes up 30% of a FICO score. When you close a credit card, you reduce your total available credit.^[1]

For instance, let’s say you have two credit cards: a cash-back card with a $2,000 credit limit and a $0 balance, and a travel rewards card with a $3,000 credit limit and a $1,000 balance. Factoring in your $5,000 overall credit limit, your aggregate credit utilization rate would be 20%.

$1,000 combined balance ÷ $5,000 available credit = 20% credit utilization ratio

If you close the cash-back credit card (without paying down any of the outstanding $1,000 balance on the other card), your utilization rate would increase. This is because you have less credit available to you, yet you carry the same amount of credit card debt.

$1,000 combined balance ÷ $3,000 available credit = 33% credit utilization ratio

Keep in mind that credit scores consider your utilization rates on individual credit accounts (each account separately), as well as your overall combined rate (all accounts taken together). You can use a credit utilization calculator to keep close tabs on your overall utilization rate. As a rule of thumb, most financial experts suggest keeping your overall utilization below 30%.^[1]

When should you close a credit card?

Before closing a credit card, it’s important to consider why you want to cancel. Are you looking to switch to a new type of card? Do you want to ditch an annual fee? Or perhaps you simply don’t want credit cards around because you use them too much. It may make sense to close a credit card if you want to do one of the following.

Avoid a high annual fee: Credit cards sometimes have annual fees, especially rewards cards. If a card is costing you more than it’s earning you, it may be time to close the account.
Prevent overspending: Credit cards are a convenient way to pay for purchases. However, if you tend to overspend when you have access to credit, you may want to close the card to cut back on unnecessary spending.
Switch to a different type of card: You might want to take advantage of another issuer’s promotional sign-up bonus. Or perhaps you want to exchange your card for one that offers cash back or travel rewards. If you want to limit the number of credit cards you carry, canceling a current card in favor of a new one might make sense.

When shouldn’t you close a credit card?

When closing a credit card, it’s important to get the timing right. Here’s when it could make sense to close your card.

It’s your oldest account. Since the length of your credit history impacts your credit scores, canceling your oldest account could hurt your credit. Keeping an account open can help round out your credit profile—even if it’s minimally used.^[1]
You’re about to finance a large purchase. Keeping the concept of utilization rates in mind, a big purchase would raise your outstanding balance. Without an offsetting repayment, your utilization rate would increase significantly. For that reason, it might make sense to keep a card open until you’ve made (and paid off) your expected major purchase.^[1]
You’re feeling indifferent about the card. Sometimes, we glance at our wallets and notice a credit card collecting dust. We think, “Hmm, I barely use that card anymore,” and consider closing the card. However, if you’re canceling simply for the sake of canceling, that might not be the wisest decision. You could potentially increase your utilization ration and hurt your credit scores.^[1]

How to safely close your credit card

When closing a credit card, you can avoid financial headaches if you approach the process the right way. Here are a few tips to safely close your credit card with your issuer.

Send a written cancellation request

Although you should be able to cancel your credit card via phone or online, it’s wise to get written verification for your records. This can help protect against errors in your credit report and expedite potential disputes down the road. Ask your issuer to send a written notice of your account’s closure. You can also send a short confirmation letter that details your request to your card issuer.^[2]

Ask the credit card issuer for a product change

Instead of canceling, some card issuers will let you keep the same account and credit limit, but they allow you to “product change” to another card they offer. For instance, consider this option if you’re hoping to switch from a standard card to a rewards card or want a card without an annual fee.

Transfer recurring payments It’s convenient to use credit cards for recurring payments, such as utility bills and subscription fees. Before you cancel your card, remember to update your service accounts. Connect them to a new payment method to avoid missed payments and service disruption.

Pay off your balance

Closing a credit card won’t resolve any outstanding debt. If you leave a balance on your credit card past the grace period, your creditor could charge off your debt. This typically happens after 120 to 180 days of nonpayment, and it can result in a major black mark on your credit reports. The card issuer may also send your account to collections, leaving you with additional fees and a second negative mark. If you’re canceling a credit card, make sure you have a plan in place to pay off any remaining debt.^[2]

Check your credit reports

After you cancel a credit card, check your credit reports to make sure everything has been reported accurately. You can check your credit reports for free once a year at AnnualCreditReport.com.

The bottom line

Closing a credit card may hurt your credit score. When you cancel a credit card, it usually affects your credit history and credit utilization rate—two important credit-scoring factors. Before canceling, consider your reasons and whether the time is right. Keep in mind, you don’t have to actively use a credit card for your credit scores to benefit. As long as the card is open and in good standing, you’re earning a positive history.^[1]

However, your credit card company may eventually close your account due to inactivity. To keep your account open, ask the issuer about its cancellation policy. Alternatively, consider using a card only for a small monthly bill, such as a streaming service subscription. This can also help you improve your credit as long as you make timely payments.

myFICO. “What's in my FICO Scores?”
Consumer Financial Protection Bureau. “I want to close my credit card account. What should I do?”
Experian. “When Are Closed Accounts Deleted?”