Q: I’m thinking of closing a credit card, but I don’t want it to have a negative impact on my credit score. Is this possible? 

A: Closing a credit card might seem like a simple financial decision, but it can have ripple effects on your credit score. Whether you’re simplifying your financial life, avoiding temptation or managing inactive accounts, it’s crucial to understand how closing a card affects your credit and what steps to take to minimize any negative impact. 

Does closing a credit card hurt my credit score? 

Yes, closing a credit card can hurt your score — but it doesn’t always. Here are the factors that will determine whether closing a card will negatively impact your score: 

When should I close a credit card?  

Under the following circumstances, it’s best to close a credit card: 

• High annual fees and/or poor customer service. If your card carries a high annual fee or the company consistently offers poor customer service, it may not be worth keeping open. 

• You hardly use the card. If you rarely use the card and it has a low credit limit, it likely is not doing much for your credit score — and closing it won’t affect your score much either. 

• You’ve graduated to a permanent card. Some credit cards, such as secured cards, are meant to be temporary. Once you’ve proven you can pay your bill consistently on time, you may be able to graduate to an unsecured card. Some credit card companies will allow you to move up through their own company. If not, it’s best to cancel your “beginner card” after applying for and getting accepted to have a permanent card elsewhere. 

• Your life circumstances have changed. If you’re getting divorced or separated from a life partner, or your spouse has passed on, it’s a good idea to start disentangling your joint finances. For credit cards, this means canceling joint credit cards or removing yourself or your partner as an authorized user on your credit cards. 

• You have reason to believe your card may have been compromised. If a card may have been fraudulently used and/or poses a security risk, it may be best to close it. 

How can I close a credit card responsibly? 

If you’ve determined that it’s in your best interest to close a credit card, here’s how to do so responsibly: 

Step 1: Pay off or transfer your balance. Before closing a credit card, ensure the balance is zero. Carrying a balance on a card you’re trying to close complicates the process and could lead to additional fees or credit issues. 

Step 2: Review your credit utilization. Look at how closing the card will affect your total credit limit. If the card has a high credit limit, and you regularly carry balances on other cards, closing it can spike your utilization ratio. 

Step 3: Consider account age. If the card you want to close is your oldest credit account, think twice. The longer your average account age, the better it is for your credit score. 

Step 4: Redeem rewards or points. Many credit cards have reward programs tied to them. Be sure to redeem any cashback, points or miles before closing your account, as you might forfeit them after closure. 

Step 5: Inform the card issuer. Call the customer service number on the back of the card to request closure. Confirm that the account is closed in writing to avoid miscommunication. 

Step 6: Monitor your credit report. After closing the account, check your credit report to ensure the status is updated correctly. Errors can negatively impact your credit score. 

Are there alternatives to closing my credit card? 

If you’re worried about potential credit score impacts, consider these alternatives: 

• Downgrade the card. Ask your card issuer if you can downgrade to a no-fee version of the card. This allows you to keep the credit line open without paying an annual fee. 

• Put the card on ice. If you’re tempted to overspend, physically remove the card from your wallet or store it in a secure place where you can’t use it on a whim. 

• Use it sparingly. You can charge small, recurring expenses to the card, such as a subscription or utility bill, to keep it active and demonstrate responsible use. 

How can I minimize the impact of closing a credit card on my score? 

If you need to close a credit card and you’re worried about it hurting your credit score, there are steps you can take to keep the impact as mild as possible. First, keep your overall credit utilization low by paying down balances on your remaining cards before closing one to ensure your utilization ratio stays low. Next, if you have multiple cards to choose from, close the one with the shortest history to preserve your average account age. Finally, avoid making other major credit changes, like applying for new loans or cards, right after closing a card. 

How long will the closed account stay on my credit report? 

Closed accounts that have a positive payment history will typically stay on your credit report for up to 10 years, contributing positively to your credit score. Accounts with a negative history remain for approximately seven years, so it’s important to settle all balances and avoid late payments before closure. 

Closing a credit card isn’t a decision to be taken lightly, but with careful planning, you can avoid significant impacts on your credit score. Use this information to help you navigate the process responsibly. 

This content is intended for general information and discussion purposes only. It does not constitute financial, legal, or professional advice. Readers should seek independent guidance from a qualified professional to ensure decisions are appropriate to their personal situation when applicable.