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Does Closing a Credit Card Hurt Your Credit? A Helpful Guide in 2023

does closing a credit card hurt your credit

Does Closing a Credit Card Hurt Your Credit? A Helpful Guide in 2023
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Does Closing a Credit Card Hurt Your Credit? A Helpful Guide in 2023

Does closing a credit card hurt your credit? Everyone thinks that closing a credit card account will damage your credit score. It is true that, generally, closing your credit card can impact your credit, but it is not always the case. As long as you pay off all your debt to $0 in the credit card accounts before cancelling (not necessarily an account you are planning to close), you can avoid having your credit score going down. 

Another important thing is that you should try keeping your credit accounts open for as long as possible, even if it is not in use, so you can have a long credit history. However, if you have any valid reason for closing a credit account, for example, you can choose to close a joint account during a divorce or separation, or you can close an account if your credit card company is charging you high annual fees. 

If you want to know what reasons you might want to close, or if you want to know how to cancel a credit card in the right way, read more. 

In What Ways Does Closing a Credit Card Hurt Your Credit? 

You should always weigh the advantages and disadvantages before closing a credit card since it will possibly affect your score. So, for your reference, here are a few points that you should consider before closing your credit account. 

  1. Your available credit limit will reduce if you decide to close your account. Your credit utilization ratio will further increase, which lenders see as a sign of risk as it can show that you are using a higher amount of your available credit. 
  2. You should always keep in mind, as a general rule, that your utilization rate should be less than 30 per cent, which is exactly what is advised by credit experts, too. 
  3. The main reason why closing a credit card can hurt your credit is that it reduces the average age of your credit accounts, which reflects on your credit report and damages your credit score.
    One of the major factors that affect your credit report is the age of your accounts. Credit bureaus consider giving higher credit points to customers who have a longer payment history. If you have any missed or late payments, they could stay on your credit report for five to seven years
  4. You also do not have to worry about your credit score dropping; even though your credit score may dramatically drop after you close a card account, you can bring your score back to normal in a few months if you pay your bills on time.
  5. If you did not take on new debt after closing your credit account, your credit score should automatically increase in time. But, if you are planning to get a loan or another credit card in the next few months, it is better not to cancel the current card you have. 

Valid Reasons To Close Your Credit Card

Does closing a credit card hurt your credit even if it is a reasonable situation? Yes, your credit score can be affected by the closure of your credit card, but it is repairable and temporary, and you can easily bring it back to normal if you have a long credit history. Even though closing a credit card is a bad idea, you may have to face situations where you need to do it. 

does closing a credit card hurt your credit
Does closing a credit card hurt your credit?

1. If You Are Going Through a Separation or Divorce

If you are currently going through a separation or divorce while maintaining joint credit with the other cardholder, it is best to close the account as soon as possible since you are held liable for any past or future expenses the other cardholder makes and vice versa. 

Can you imagine your ex racking up a lot of credit charges on your joint account and leaving the charges to be paid by you? If that situation occurs or even if the spending occurs on a routine basis even after separation, you are responsible for the charges as well. Even if the divorce decree states that your former spouse is responsible, that does not release you from your obligations from the lender’s point of view.

2. If Your Credit Card Issuer, or Bank, Charges High Annual Fees

If you are being charged a high annual fee for a credit card account you don’t often use, that cancellation is warranted. However, if you receive benefits through the account, like travel credits and perks, which can outweigh the annual fee, then it might be worth the cost. 

So, if you are planning to close a credit card, call your credit card issuers beforehand, and ask them to waive the annual fee. It does not hurt to ask, you might end up with a pleasant surprise. But make sure to mention that you are planning to close the account. 

3. If You Are Tempted to Use It Too Much

If you are one of those people who can not resist the temptation of using their credit card, you can choose to give up using the credit card altogether. While, for some people, this might be a valid reason to close, with some curbs, you can control the habit of overspending and keep your credit score in good shape as well. 

For example, you can stop carrying your card in your wallet and keep it safe somewhere closed. Not having your credit card immediately available can help you gain some resistance against temptation. 

How To Close a Credit Card Properly

So, now you know the answer to the question, “Does closing a credit card hurt your credit?”. After considering all the options, other than closing your credit card account and weighing all the pros and cons, if you come to the final conclusion of closing down your account, you might as well do it correctly. 

  • Cashbacks and Benefits: Check for any points, cashback rewards, or any other unused benefits. If you find anything unused, you may want to utilize them all before cancelling your card. You may not be able to use any of them once your account is closed.
  • Credit Utilization Ratio: Check if you have paid off all the debt of your other credit cards, too, if you own any. Or, try to bring down all the balances as low as possible. This is a way for you to help minimize the credit utilization ratio changes. 
  • Available Balance: Make a call to your credit card company, and confirm that you want to close your account. You should also verify your available balance.
  • Statement of Letter: You can also send an email to your card company requesting to close your account. If your available balance is zero, ask them to give you a statement letter confirming that you’re closing the account with a zero balance. 
  • Credit Reports Check: You should check your credit report to make sure that your account is closed after waiting for 30 to 45 days. 
  • Dispute Credit Report Issues: If anything seems off on your reports, reach out to the credit report bureaus and dispute them as soon as possible. 

Key Points

  • Sometimes closing a card account is necessary, even though it is best to avoid it. 
  • You can close a credit account without damaging your credit scores. 
  • Keep your credit utilization ratio as low as possible.
  • Paying off the full balance due on your credit cards (not just the one you are closing) before closing is the key strategy to avoid damage to your credit score. 
  • Closing your charge card will not affect your credit history. 
  • Keep checking your credit score at regular intervals. You can use some of the free websites like to check your credit for free.

Frequently Asked Questions

  1. How long should you wait to close a credit card?

It is better not to close a credit card, even when you are not using them, according to advice from credit experts. This is because cancelling your credit card negatively impacts your credit score and credit reports. 

  1. Does cancelling credit cards improve credit scores?

No, closing your credit card accounts does not improve your credit score. Instead, it has the chance of doing the exact opposite by damaging your credit score. The lenders use your credit reports to analyze your score and determine whether or not to approve you for any credit, so it is important to think carefully before closing your account.

  1. How long should you wait to close a credit card?

It depends on the bank and your credit card issuers. But, most of them offer a 30 days period of grace time to close your credit card and get a refund of the annual fees. Other than that, it is recommended not to close your credit card at all unless there’s a valid reason.

  1. Is it better to cancel unused credit cards or keep them?

It is better to keep unused credit cards rather than closing, which can stop the credit account from ageing. Your average account age can become negatively affected if you close a credit account. This, in turn, affects your credit score. 

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Closing Thoughts

If you were wondering does closing a credit card hurts your credit, yes, it does. As stated several times in this article. It is not recommended to close your credit card account. But, when certain situations call for it, like paying a hefty annual fee but getting nothing as a benefit in return, which is quite reasonable, you can, and probably should, cancel them. If done strategically, you can avoid the negative impacts on your credit score as well.

Look at both the bright side and the negative side of closing your credit account and how much damage it would do to your credit score. If you feel like the reason you are closing the account is worth the negative impacts after carefully considering all the factors, and you come to a clear conclusion, close your credit card accounts following the above steps to minimize any risk.

If you have a low credit score, repairing it can take months or even years. If you want to repair your credit with quick solutions, reach out to The Credit Pros


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