Closing an unused card usually hurts your credit score more than keeping it open costs you
The instinct to close a card you don't use makes sense — one fewer account to track, one fewer bill to worry about. But closing it typically lowers your credit score, sometimes by 10 to 50 points or more, because it shrinks your total available credit and can raise the percentage of credit you're actually using. If you keep the card open and unused, the only real cost is an annual fee, which you can often get waived with a phone call to the card issuer.
The damage to your score matters most if you're planning to borrow money soon — explore for a mortgage, car loan, or new card within the next few months. If you're not borrowing, the score drop is temporary and less urgent. But even then, keeping the card open is usually the smarter move unless the annual fee is high and the issuer won't remove it.
Key Takeaways
- Closing a card reduces your available credit, which can raise your credit utilization ratio and lower your score by 10 to 50 points or more.
- An unused card with no annual fee costs you nothing to keep open and actually helps your credit score by keeping your available credit high.
- If your card has an annual fee, call the issuer and ask them to waive it or switch you to a no-fee version of the same card before you close it.
- Close a card only if the annual fee is high, the issuer won't waive it, and you're not planning to borrow money in the next six months.
- If you do close a card, do it when your credit utilization is low and you're not explore for new credit soon.
How closing a card affects your credit score
Your credit score depends partly on how much of your available credit you're using — this is called your credit utilization ratio. If you have three cards with $5,000 limits each, your total available credit is $15,000. If you're carrying a $3,000 balance, your utilization is 20 percent. Close one of those cards, and your available credit drops to $10,000, so the same $3,000 balance now represents 30 percent utilization. That jump alone can lower your score.
The score drop is temporary. Over time, as you pay down balances and the closed account ages, the damage fades. But if you're planning to borrow money — a mortgage, car loan, or new card — in the next few months, the timing matters. Lenders pull your credit report right before they approve you, and a lower score can mean a higher interest rate or a smaller loan amount.
The impact varies by person. Someone with a long credit history and low utilization might see a 10-point drop. Someone with a short history and higher utilization might see 50 points or more. There's no way to predict your exact score change without running a simulation, but the direction is always down.
When an annual fee makes closing worth it
If your card charges an annual fee and you're not using the card, the fee is real money leaving your account every year. Common annual fees range from $25 to $95 for basic cards, and $300 to $550 for premium travel or rewards cards. Before you close the card, call the issuer and ask them to waive the fee or move you to a no-fee version of the same card.
Many issuers will waive a single annual fee if you ask, especially if you've been a customer for years. Some will automatically downgrade you to a card with no annual fee — you keep the account open, your credit history stays intact, and you pay nothing. This is the best outcome: you get the benefits of keeping the account open without the cost.
If the issuer refuses to waive or reduce the fee, and the fee is high enough that you're certain you won't use the card, closing it may make sense. But do the math first. A $95 annual fee over five years is $475. A 30-point score drop that affects your mortgage rate by 0.25 percent on a $300,000 loan costs you roughly $750 in extra interest over the life of the loan. The fee alone might not justify the score damage.
Cards with no annual fee — keep them open
If your unused card has no annual fee, there is almost no reason to close it. You're paying nothing to keep it open, and it's actively helping your credit score by increasing your available credit. Even if you never use it again, the account will age in your favor. Older accounts help your credit score, so a card you opened five years ago and haven't touched is working for you in the background.
The only exception is if the card issuer is charging you hidden fees — maintenance fees, inactivity fees, or monthly charges that aren't labeled as annual fees. Read your cardholder agreement or call and ask directly. Most mainstream issuers don't charge these, but some smaller banks or credit unions do. If you're being charged anything at all, ask if it can be waived. If not, closing makes more sense.
Keep the card in a safe place and check on it once or twice a year. Some issuers will close accounts that haven't been used in a long time (usually two to three years), though they'll notify you first. If you want to prevent that, make a small purchase on the card every few months — a subscription, a gas fill-up, anything that keeps the account active without creating a balance you have to pay off.
The right time to close a card, if you must
If you've decided to close the card despite the score impact, timing matters. Close it when your credit utilization is at its lowest — ideally after you've paid down your other card balances. If you're carrying $5,000 across two cards with $10,000 total limits, your utilization is 50 percent. Pay that down to $2,000 before you close a card, and your utilization stays manageable even after your available credit shrinks.
Avoid closing a card if you're planning to borrow money in the next three to six months. The score drop will be fresh on your credit report, and lenders will see it. Wait until after you've closed on a mortgage, finished a car loan, or gotten approved for whatever credit you need. Then close the card if you still want to.
When you're ready, call the card issuer's customer service number on the back of the card. Tell them you want to close the account. They may ask why, and they may offer to waive the fee or move you to a different card — listen to the offer, but if you've already decided, you can decline. The issuer will close the account and send you a confirmation letter. The account will stay on your credit report for seven to ten years, which is actually good for your credit history, so the damage fades over time.
What happens to rewards points and balances
Before you close a card, use any rewards points you've accumulated. Most issuers will let you redeem points up until the account closes, but policies vary. Call and ask what happens to your points if you close the account — some programs let you keep them for a period after closing, and some delete them when ready. If you have a substantial balance of points, redeem them before you make the call to close.
If you have an outstanding balance on the card, you must pay it off before the issuer will close the account. You can't close a card with a balance; the issuer won't allow it. Pay the balance in full, wait for the payment to post (usually one to three business days), and then call to close. If you close the account and then carry a balance, the issuer will reopen it automatically to collect the debt.
Alternatives to closing: downgrading or freezing
Before you close, ask the issuer if you can downgrade to a no-fee version of the same card. Many issuers offer multiple versions of the same card — a premium version with an annual fee and rewards, and a basic version with no fee and basic rewards or no rewards at all. Downgrading keeps your account open, preserves your credit history, and eliminates the fee. This is almost always better than closing.
Some card issuers also let you put a card on pause or freeze it, which means you can't use it but the account stays open. This is rare, but worth asking about if you want to keep the account active without the temptation to use it. The account still helps your credit score, and you can unfreeze it anytime.
Frequently Asked Questions
Will closing a credit card hurt my credit score?
Yes, closing a card typically lowers your score by 10 to 50 points or more because it reduces your available credit and can raise your credit utilization ratio. The damage is temporary and fades over time, but it's most noticeable in the first few months after closing.
How long does the credit score damage last?
The when ready impact is usually strongest for the first three to six months. The score gradually recovers as you pay down other balances and the closed account ages. After seven to ten years, the account falls off your credit report entirely, but it may help your score for years before that because older accounts are positive for credit history.
Can I get the annual fee waived instead of closing the card?
Yes, many issuers will waive a single annual fee if you call and ask, especially if you've been a customer for a while. Some will also downgrade you to a no-fee version of the same card. It's worth calling before you close, because this option keeps your account open and your credit score intact.
What if I close a card and then need to use it again?
You can reopen a closed account by calling the issuer, but they're not required to do it. Some issuers will reopen accounts within a short window (usually 30 to 60 days), and some won't reopen at all. It's better to keep the card open if there's any chance you might use it later.
Does it matter which card I close if I have multiple cards?
Close the card with the lowest credit limit or the shortest history first, because those have less impact on your available credit and credit history length. Avoid closing your oldest card, because age helps your credit score. If one card has an annual fee and others don't, close the one with the fee if you must close something.