One option is to pay off all your credit cards before closing an account, especially the one you're closing. To mitigate potential credit score damage, you should make a plan to keep your credit utilization rate low even after you close the account. Yet closing a credit card could raise your overall credit utilization rate and possibly lower your credit scores.

Even after you close a positive account, it may remain on your credit for up to 10 years. What is the impact on your credit score?Ĭlosing a credit card won't immediately affect your length of credit history (worth 15% of your FICO Score) by lowering your average credit age. American Express, in particular, may claw back your bonus or even close your account if it thinks you're trying to game the system. Card issuers aren't fans of people who open credit cards to score a sign-up bonus and don't become valuable customers. Our advice is to never close your credit card before the one-year mark. Has the account been open for more than one year? Lower credit scores could make it harder to qualify for new accounts and might lead to higher interest rates on new credit in the future. If closing a card causes your overall credit utilization to climb, your credit scores might decline. Does canceling a credit card hurt your credit?īefore you cancel any credit card, it's essential to ask the following questions: Will closing this card raise your credit utilization rate?Ĭredit utilization describes the relationship between your credit card limits and balances. This guide outlines everything you need to know about canceling a credit card. While it's usually best to leave your credit cards open, if you have a reason for canceling a credit card (such as closing a joint account during a divorce or setting yourself up to potentially re-earn a sign-up bonus later), the process doesn't have to be complicated. This knowledge is just as necessary as learning how to take advantage of attractive new credit card offers. Knowing when and how to cancel a credit card (and when to keep an account open) is critical to your long-term success as a points and miles enthusiast. It's best to weigh several factors to ensure that closing your account doesn't have unintended consequences. Deciding whether to cancel a credit card isn't a quick and easy decision - or at least it shouldn't be.

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