Closing a credit card can hurt your credit score, but the impact depends on several factors including your overall credit utilization and the age of the account.
Always pay your statement balance in full each month — not just the minimum. Carrying a balance costs the average American over $1,200 per year in interest charges.
How Closing a Card Affects Your Score
When you close a credit card, two key credit score factors are affected: credit utilization ratio and average age of accounts. Both can cause a temporary score dip.
When Closing a Card Makes Sense
Despite the potential score impact, closing a card may be the right move if it carries a high annual fee you cannot justify, or if you struggle with overspending.
A credit card is not the right tool for every situation. Consider alternatives if any of the following apply to you:
- You carry a balance month-to-month: At an average APR of 21.76%, carrying a balance on a rewards card will cost more than the rewards are worth. A personal loan at a lower fixed rate is almost always cheaper for debt you cannot pay off monthly.
- You need cash, not credit: Credit card cash advances typically charge 25–30% APR with no grace period and a 3–5% transaction fee. A personal loan is significantly cheaper for cash needs.
- Your credit score is below 580: Most rewards and cashback cards require 670+. Below 580, a secured credit card or credit-builder loan is a more realistic path to building credit.
- You are rebuilding after bankruptcy: Most unsecured cards are unavailable for 1–2 years post-discharge. A secured card with a refundable deposit is the standard rebuilding tool.
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Frequently Asked Questions
How much will my score drop if I close a credit card?
Most people see a 5–15 point drop, though the impact varies based on your overall credit profile.