Canceling a credit card will lower your credit score, usually by 10 to 50 points, because it shrinks the total credit available to you and can raise the percentage of credit you are actively using.
The damage is not permanent. Your score will recover over time as you continue to pay bills on schedule and the closed account ages. But the hit happens when ready, and the larger your available credit was before you closed the card, the bigger the drop tends to be.
Whether you should close a card depends on what is driving the decision. If you are closing it because you are worried about overspending, there are ways to reduce temptation without closing the account. If you are closing it because of an annual fee you do not want to pay, you might be able to call the card issuer and ask for a fee waiver instead.
Key Takeaways
- Closing a credit card reduces your total available credit, which raises your credit utilization ratio — the percentage of your credit limit you are using across all cards.
- A higher utilization ratio signals risk to lenders and causes your score to drop, even if you have never missed a payment.
- The damage is temporary: your score will recover as months pass and the closed account stops being counted as active.
- Before closing a card, call the issuer and ask if they can waive the annual fee or convert the card to a no-fee version.
- If you want to close a card for safety reasons, you can freeze or lock the card instead, which stops new charges without closing the account.
Why Closing a Card Lowers Your Score
Credit scoring models weight two main factors when you close a card: your credit utilization ratio and the age of your credit history.
Your utilization ratio is the total amount you owe divided by the total credit available to you. If you have three cards with $5,000 limits each and you owe $3,000 total, your utilization is 20 percent ($3,000 ÷ $15,000). If you close one of those cards, your available credit drops to $10,000, and your utilization jumps to 30 percent ($3,000 ÷ $10,000) — even though you did not charge anything new. Most scoring models treat utilization above 30 percent as higher risk, so your score drops.
Closing a card also removes an active account from your credit history. Scoring models reward a longer average age of accounts, so closing an older card hurts more than closing a newer one. If the card you are closing is your oldest account, the damage is usually larger.
How Much Your Score Will Drop
The size of the drop depends on three things: how much available credit the card represented, how old the card is, and what your utilization ratio looks like right now.
If you have a high utilization ratio already — say, 50 or 60 percent — closing a card will push you higher and cause a bigger drop. If your utilization is already low, the change may be smaller. A person closing a card with a $500 limit will see less damage than someone closing a card with a $10,000 limit.
In most cases, expect a drop of 10 to 50 points. Some people see larger drops if the card was old or if they were already carrying high balances. The drop is not permanent: as you continue to pay on time and the closed account ages, your score will climb back.
When You Should Close a Card
Close a card if the annual fee is high and the issuer will not waive it, and you are not using the card. Close it if you are moving to another country and cannot maintain a U.S. account. Close it if you have so many cards that managing them is causing you to miss payments on other accounts.
Do not close a card straightforward because you are not using it. An unused card with a zero balance actually helps your utilization ratio. Do not close your oldest card unless you have another card that is nearly as old, because closing it will lower the average age of your accounts.
If you are closing a card because you are afraid you will overspend on it, consider these alternatives first: call the issuer and ask them to lower your credit limit, freeze the card in a drawer, or use their mobile app to lock the card so new charges are blocked. All of these keep the account open and preserve your credit score.
Steps to Take Before You Close a Card
Before you call to close the account, pay off any balance on the card. Closing a card with a balance does not erase the debt, but it can make the account harder to manage if a dispute arises later.
Check whether the card has an annual fee. If it does, call the issuer's customer service number on the back of the card and ask if they can waive the fee or move you to a no-fee version of the same card. Many issuers will do this to keep your account open. If they refuse and you want to close it anyway, proceed to the next step.
Call the issuer and ask to close the account. Do not close it online if you can avoid it — a phone call creates a record. Ask the representative to confirm the account is closed and to note in your file that you requested the closure. Ask them to send you written confirmation by mail or email.
After the account closes, check your credit report a few weeks later to make sure it shows as closed at your request, not closed by the issuer. You can order a free credit report from each of the three major bureaus — Equifax, Experian, and TransUnion — once per year at annualcreditreport.com.
How Long It Takes Your Score to Recover
Your score will start to recover as soon as the closed account stops being counted as active. This usually happens within one or two billing cycles after you close the card. The larger the initial drop, the longer the recovery typically takes.
Most people see their score return to its pre-closure level within three to six months if they continue to pay all other bills on time and do not increase their balances on other cards. If you close a very old card or a card with a very high limit, recovery may take longer.
The closed account will remain on your credit report for up to seven years, but its impact on your score will fade as it ages. After two or three years, it will have almost no effect on your score at all.
What Happens to Rewards or Points on a Closed Card
Most issuers will let you keep and use any rewards or points you have earned on a closed card, but the rules vary. Some cards let you redeem points for cash back, travel, or merchandise even after the account is closed. Others require you to redeem before you close.
Before you close the card, log into your account online or call customer service and ask what happens to your rewards. If you have a large balance of points, redeem them before you close the account to avoid losing them. Get the answer in writing if possible.
Frequently Asked Questions
Will closing a credit card hurt my credit if I have a high credit score?
Yes. A high score means you have more room to drop, so the damage may be more noticeable in absolute terms. Someone with a 750 score might drop 30 to 50 points, while someone with a 650 score might drop 10 to 20. Both are temporary, but both happen.
Should I close old cards or new cards?
Close new cards if you must close one. Older cards help your average account age, which scoring models reward. If you have to close a card, close the newest one with the lowest limit, unless it has a high annual fee you cannot waive.
What if I close a card and my score drops too much?
Your score will recover on its own as you continue to pay on time. You cannot reopen a closed account, but you can open a new card if you need to rebuild your available credit faster. A new card will have a lower limit at first, but it will help your utilization ratio when ready.
Can I close a card without it showing on my credit report?
No. The closure will appear on your credit report and will be visible to lenders. What matters is that it shows as closed at your request, not closed by the issuer due to inactivity or default. Always call to close the account yourself rather than letting the issuer close it.
Does closing a card affect my ability to get approved for new credit?
Temporarily, yes. A lower credit score makes approval harder in the short term. But if you wait three to six months and continue to pay all bills on time, your score will recover and your approval odds will improve. Lenders also look at your payment history, not just your score, so a single closure will not disqualify you.