Does it hurt my credit to close a credit card?

Tip

Keep an eye on your statements. If you decide to keep an unused account open, be sure to watch your statements to protect against identity theft and to check for unexpected fees or charges.

Some people opt to keep a credit card account open, especially if it’s an old account and they have a positive payment history because this may help maintain a higher credit score. However, closing the account might be a good decision if:

• The card has annual fees or poor terms that outweigh the benefits
• It helps you avoid accumulating debt you can’t pay off
• You aren’t planning to apply for credit in the near future

Otherwise, closing an existing credit card could also decrease your credit score, rather than help it. The change to your score may be temporary or minor but the full impact will vary based on other factors about your credit profile. Part of your score is based on the amount of credit you’re using, divided by the total amount you have available. This is known as your “credit utilization ratio”. Closing an existing card can increase your credit utilization ratio and lower your score.

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