At some point, you might think about canceling a credit card. Maybe the annual fees seem too high. Or maybe the rewards don’t fit your lifestyle anymore. Perhaps you simply want to simplify your wallet—or eliminate the temptation to overspend.

Whatever your reason, it’s important to pause and ask: Does closing a credit card hurt your credit? The answer isn’t always simple. While closing a card can make sense in certain situations, it may also have unintended consequences for your credit score.

Why Canceling a Credit Card Can Lower Your Credit Score

Your credit score relies on several key factors. Unfortunately, closing a credit card can negatively impact a few of them. Let’s break down how this happens—and what you should consider first.

It Can Raise Your Credit Utilization Ratio

Your credit utilization ratio is the percentage of available credit you’re using. When you close a card, your total available credit drops. If your balances stay the same, your utilization goes up.

High utilization is a red flag to lenders. Experts suggest staying under 30%. Anything above that may drag your score down.

Let’s look at an example:

• You have Card A with a $10,000 balance and $15,000 limit.
• You have Card B with a $2,000 balance and $25,000 limit.
• Combined, you have $12,000 in balances and $40,000 in total credit—putting you at 30% utilization.

But if you close Card B, your limit drops to $15,000. Now, $10,000 of $15,000 is being used—that’s 67% utilization. That’s a major shift.

So before closing any account, calculate the impact. If it spikes your utilization ratio, it may be better to keep it open.

It Can Lower the Average Age of Your Credit Accounts

Credit history length contributes 15% to your credit score. Older accounts show experience and consistency.

Does closing a credit card hurt your credit in this area? It might—especially if you’re canceling one of your oldest cards. That said, accounts closed in good standing can stay on your report for up to 10 years. Still, once removed, your average account age may drop.

If the card you’re canceling is far older than your others, keep it open unless necessary.

It Might Reduce Your Credit Mix

Credit scoring models reward borrowers with a diverse mix of credit. This includes installment loans (like auto or student loans) and revolving credit (such as credit cards).

Canceling your only credit card can narrow your credit mix. While this impact is usually small, it may still matter if you’re trying to maintain an excellent score.

For example: If you have student loans, an auto loan, and one credit card—and you cancel the card—you lose your only revolving credit line.

Does closing a credit card hurt your credit in this way? Possibly. But only if you don’t have other active credit card accounts.

When Should You Keep a Credit Card Open?

Sometimes, keeping the card open is the smartest move. Consider keeping your credit card if:

• It’s your oldest account.
• You have no other open credit cards.
• Closing it would raise your utilization above 30%.
• It’s in good standing with a strong payment history.

Even if you rarely use it, an old account can positively affect your credit profile. Just make sure it remains active.

When Does It Make Sense to Cancel a Card?

That said, there are legitimate reasons to close a credit card. It may be the right move if:

• The annual fee is too high and no longer worth it.
• The card has a high interest rate and you need to carry a balance.
• You’re tempted to overspend with that card.
• You want better rewards or upgraded perks.

Before canceling, check if your issuer allows a product change—downgrading to a no-fee version without closing the account.

Alternatives to Canceling Your Credit Card

If you’re on the fence, consider these strategies instead of canceling:

1. Ask for a Fee Waiver

Many issuers waive or reduce annual fees—especially if you ask.

2. Request a Product Change

Switch to a different card with no fee, but keep the same account history intact.

3. Set Up a Small Recurring Charge

Charge a subscription to the card to keep it active. Just don’t forget to pay it off.

4. Put the Card Away

Remove it from your wallet. Freeze it (literally, if needed). You can even ask your issuer to pause usage.

Does closing a credit card hurt your credit more than these alternatives? In many cases, yes. These options protect your score while reducing risk.

How to Close a Credit Card the Right Way

If you decide cancellation is necessary, do it strategically. Follow these steps to avoid hurting your credit more than necessary:

1. Pay Off the Balance
   If you can’t, know you’ll still owe monthly payments with interest even after the account closes.
2. Use or Transfer Rewards
   Redeem all points or cash back before closing, or they may disappear.
3. Update Any Recurring Charges
   Move subscriptions or bills linked to the card to another account.
4. Contact the Issuer
   Call or go online to request cancellation. Ask for confirmation in writing, and ensure the account shows as “closed at customer’s request.”
5. Destroy the Card
   Shred or cut up the card securely. Don’t forget about authorized users—they should destroy their cards too.
6. Monitor Your Credit Reports
   Check that the account shows correctly as closed. If something looks off, dispute the issue with the credit bureaus.

So, Does Closing a Credit Card Hurt Your Credit?

Yes, it can—but not always.

Canceling a card might increase your utilization, reduce your account age, or narrow your credit mix. That said, the impact depends on your unique credit profile.

If the card no longer serves your goals, and you’ve weighed the alternatives, closing it might be worth it. But if you’re close to applying for a mortgage or auto loan, wait. You don’t want to risk a dip in your score at the wrong time.

Final Thoughts

Does closing a credit card hurt your credit? Often, yes—but the size of the impact varies. That’s why it’s crucial to evaluate your full financial picture before making the call.

Explore all options. Consider downgrading or pausing the card instead. And if you do cancel, make sure it’s for the right reasons—and on your terms.

Once closed, stay alert. Monitor your credit and take action if your score drops. With smart habits, you can recover quickly and keep your credit strong

If you ever need expert assistance or guidance on your credit journey, don’t hesitate to reach out to the Nerds! Additionally, stay updated with the latest tips and information by following us on Facebook, Instagram and TikTok!