Learn All About What Happens When You Close a Credit Card

what happens when you close a credit card

Closing a credit card is a decision many individuals face at some point in their financial journey. While it may seem like a straightforward action, the consequences of closing a credit card can be far-reaching, affecting your credit score and overall financial health. In this article, we’ll explore the nuances of what happens when you close a credit card and the key factors to consider before making this decision.

Understanding Credit Card Accounts

Before delving into the implications of closing a credit card, it’s essential to understand how credit card accounts function. A credit card is a revolving credit account that allows you to borrow money up to a predetermined credit limit. You can use this credit for purchases, and you’re required to make minimum monthly payments based on your outstanding balance.

The Pros and Cons of Closing a Credit Card

Closing a credit card can have both advantages and disadvantages. On the positive side, it can help you reduce the temptation of overspending and simplify your financial life. However, on the downside, closing a credit card may negatively impact your credit score, which is a crucial factor for various financial transactions, including obtaining loans or mortgages.

How Closing a Credit Card Affects Your Credit Score

Your credit score is a numeric representation of your creditworthiness, and it’s influenced by various factors. One of these factors is your credit utilization ratio, which measures how much of your available credit you’re using. When you close a credit card, your available credit decreases, potentially causing your credit utilization ratio to increase.

Impact on Credit Utilization Ratio

Credit utilization ratio plays a significant role in determining your credit score. When you close a credit card, the credit limit associated with that card is no longer considered in your available credit, which can lead to a higher utilization ratio. High credit utilization can negatively impact your credit score.

Impact on Average Age of Accounts

The average age of your credit accounts is another vital factor in your credit score calculation. Closing a credit card can reduce the average age of your accounts, especially if it’s one of your older cards. A shorter average age of accounts may have a detrimental effect on your credit score.

Impact on Payment History

Payment history is a crucial aspect of your credit score. If the credit card you’re closing has a positive payment history, its closure will no longer contribute to your payment history. On the other hand, if you have missed payments on that card, its closure may stop the negative impact, but the missed payments will remain on your credit report.

Alternatives to what happens when you close a credit card

Before deciding to close a credit card, consider alternatives that can help you achieve your financial goals without hurting your credit score. You can choose to leave the card open but use it sparingly or explore balance transfer options to consolidate your credit card debt. Read more…

Steps to Close a Credit Card

If you’ve weighed the pros and cons and decided to close a credit card, here are the steps to follow:

  • Pay off the balance: Ensure the card has a zero balance before closing it.
  • Contact the issuer: Call the credit card issuer and request to close the account.
  • Request written confirmation: Ask for written confirmation of the account closure.
  • Monitor your credit report: Regularly check your credit report to ensure the account is reported as “closed by consumer request.”

Frequently Asked Questions (FAQs)

1. Will closing a credit card improve my credit score?

  • Closing a credit card can negatively affect your credit score, especially if it results in a higher credit utilization ratio or a shorter average age of accounts.

2. How long does it take for the closure of a credit card to reflect on my credit report?

  • It may take a few weeks to a couple of billing cycles for the closure of a credit card to be updated on your credit report.

3. Can I reopen a closed credit card account?

  • In some cases, you may be able to reopen a closed account by contacting the issuer and requesting reactivation.

4. Are there any fees associated with closing a credit card?

  • Most credit card issuers do not charge a fee for closing a credit card account.

5. What should I do if I want to maintain a credit card but avoid using it excessively?

  • You can put the card in a safe place or consider making occasional small purchases to keep the account active without accumulating debt.


What happens when you close a credit card is a decision that should be made after careful consideration of its potential impact on your credit score and financial well-being. Understanding how it affects your credit utilization ratio, average age of accounts, and payment history is crucial. Before closing a credit card, explore alternative strategies that can help you achieve your financial goals without harming your credit score. Remember, maintaining a healthy credit profile is essential for various financial opportunities.

Leave a Reply

Your email address will not be published. Required fields are marked *