Closing a card you don't use will hurt your credit score, but keeping it open costs nothing if there's no annual fee
The answer depends on whether the card charges an annual fee. If it doesn't, closing it will lower your credit score by reducing your available credit and potentially raising your credit utilization ratio — the percentage of your credit limit you're actually using. That damage can last for years. If the card does charge an annual fee and you're not using the rewards or benefits, closing it makes sense because you're paying for something you don't get.
The score damage from closing a card is temporary but real. Your score may drop 10 to 50 points when ready, depending on how much available credit you're losing and how much of your total credit limit you're currently using. The closed account stays on your credit report for 10 years, so the damage compounds if you close multiple cards in a short time.
Key Takeaways
- Cards with no annual fee should almost always stay open, even if unused, because closing them will lower your credit score and the card costs you nothing to maintain.
- Cards with annual fees should be closed if you're not using the card's rewards, cash back, or other benefits enough to cover the fee.
- Closing a card reduces your available credit, which can raise your credit utilization ratio and damage your score for several years.
- If you want to close a card but worry about the score impact, pay down other balances first to lower your utilization ratio before you close it.
- Closed accounts remain on your credit report for 10 years, so the damage from closing multiple cards compounds if you do it all at once.
How closing a card affects your credit score
Your credit score is built from five factors: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Closing a card damages two of these at once.
First, it reduces your total available credit. If you have a $5,000 limit on a card you close, your available credit drops by $5,000. If you're carrying balances on other cards, your utilization ratio goes up. A person with $10,000 in total credit limits and $3,000 in balances has a 30% utilization ratio. Close a $5,000 card and that same $3,000 in balances now represents 60% of available credit — and higher utilization ratios hurt your score.
Second, closing a card shortens your average account age. Credit bureaus track how long your accounts have been open. Closing an old card, even one you don't use, lowers that average and can reduce your score. The damage is smaller if you're closing a newer card, but it still exists.
When an annual fee makes closing the right choice
If a card charges an annual fee — typically $95 to $550 — you should close it unless the rewards, cash back, or other benefits you're earning exceed what you pay. A card with a $95 annual fee needs to generate at least $95 in value to break even. If you're not using it, you're losing money.
Before you close, call the issuer and ask if they'll waive the fee or downgrade you to a no-annual-fee version of the same card. Many issuers will do this to keep your account open, especially if you've been a customer for years. Downgrading preserves your credit history and available credit while eliminating the fee.
If the issuer won't budge and you're certain you won't use the card, closing it is the right move. The annual fee you'd pay over time will damage your finances more than the temporary credit score hit from closing.
Strategies to minimize score damage if you must close a card
If you decide to close a card, timing matters. Pay down balances on your other cards first so your utilization ratio is as low as possible when you close the account. If you can get your utilization below 10% before closing, the score impact will be smaller.
Close cards one at a time rather than all at once. Closing multiple cards in quick succession signals financial distress to credit bureaus and damages your score more severely. Space closures out by at least a few months if you're closing more than one.
Don't close your oldest card. If you have multiple cards you're not using, close the newest one first. Your oldest account contributes most to your average account age, so keeping it open — even unused — protects that part of your score.
When keeping an unused card open makes financial sense
A no-annual-fee card costs you nothing to keep open. The issuer makes money from merchants' fees when you use the card, not from you. Keeping it open gives you a safety net: if your primary card is lost, stolen, or compromised, you have a backup. It also keeps your available credit high, which helps your credit score and gives you access to emergency funds if you need them.
Unused cards do require occasional attention. Some issuers close accounts that show no activity for 12 to 24 months. If you want to keep a card open, use it once or twice a year — even for a small purchase you'd make anyway — and pay it off when ready. This keeps the account active without costing you anything.
If a card offers benefits you might use later — like travel insurance, purchase protection, or airport lounge access — keeping it open preserves those benefits without cost. You can set up them when you need them.
The difference between closing and downgrading
Downgrading is often better than closing. When you downgrade, the issuer converts your current card to a different card in their product line — usually one with no annual fee. Your account number, credit history, and available credit all stay the same. Your credit score takes no hit.
Not all cards can be downgraded. Premium cards with high annual fees are more likely to offer downgrade options than entry-level cards. Call your issuer and ask what options are available. If they offer a downgrade, take it. You keep the account history and credit benefits while eliminating the fee.
What happens after you close a card
The closed account stays on your credit report for 10 years. During that time, it still counts toward your credit history length, but it no longer contributes to your available credit. After 10 years, it falls off your report entirely.
If you close a card with a balance, you still owe the debt. The issuer will send you statements and expect payment. Closing the account doesn't erase what you owe — it just means you can't charge new purchases to it.
If you closed a card and regret it, you can sometimes ask the issuer to reopen it within a short window — usually 30 to 60 days. After that, reopening is unlikely. If you need to rebuild available credit, you'll have to open a new account, which triggers a hard inquiry and temporarily lowers your score.
Frequently Asked Questions
Will closing a credit card hurt my credit score?
Yes. Closing a card reduces your available credit, which can raise your credit utilization ratio and lower your score. The damage is typically 10 to 50 points and can last several years. The impact is smaller if you close a newer card or if your utilization ratio is already very low.
Should I close a card with no annual fee?
No. A card with no annual fee costs you nothing to keep open and helps your credit score by maintaining available credit. Keep it open even if you don't use it, and use it once or twice a year to prevent the issuer from closing it for inactivity.
What's the best way to close multiple cards?
Close them one at a time, spaced several months apart. Close the newest cards first and keep your oldest card open. Pay down balances on your remaining cards before closing each one so your utilization ratio stays low.
Can I reopen a card I closed?
Some issuers will reopen a closed account within 30 to 60 days if you ask. After that window, reopening is unlikely. If you need to rebuild credit, you'll have to open a new account instead, which will trigger a hard inquiry.
Is downgrading better than closing?
Yes. Downgrading converts your card to a no-annual-fee version without closing the account. Your credit history, account age, and available credit all stay the same, so your score takes no hit. Ask your issuer if downgrading is an option before you close.