Are you worried about your credit score, afraid to cancel a credit card in case it causes your score to drop? There’s no need to let a credit card company hold you hostage, especially if you have good or excellent credit.
You CAN cancel a credit card without the world coming to an end, so you don’t have to keep a credit card around that has annual fees or other negatives.
But I get it. You want to understand…
What closing a card will do to your credit score
First, know that you don’t just have one credit score. There are a whole bunch of them — including the FICO scores and the VantageScore — and they’re all only snapshots in time. More importantly, anything you do that’s related to debt or potential debt can have an impact. So if you’re afraid of closing a credit card, you should also be afraid of opening one, using it, carrying a balance, missing a payment, paying late, and a host of other things.
No one can tell you ahead of time exactly how doing any of those things will impact your credit score. But I can tell you that, in general, closing a card just dings your score a little if you’ve got good or excellent credit. And that ding is usually temporary, so not usually anything to worry about.
Some exceptions would be if it’s your ONLY type of debt, your oldest card, if it changes your credit utilization ratio, or if you were right on the border between a good and not-so-good score. Even then, the impact is usually temporary.
Why cancel a credit card?
There are plenty of good reasons to cancel a credit card, such as if…
- You’ve learned that credit cards not for you (by carrying a balance, incurring late fees, or experiencing other issues with them)
- You’re sick and tired of paying annual fees and dealing with customer service issues
- You’re worried about possible identity theft issues
- You’re getting divorced, and the card is held jointly
- You haven’t used the card in a long time
- You’re DONE with debt for good
The right time to close a credit card
Once you’ve decided to close a credit card, the right time to do so is usually whenever you feel like it — unless you’re planning to take out a mortgage in the next few months that doesn’t use manual underwriting. (In that case, you basically shouldn’t do anything that might negatively impact your credit scores.)
When you close the account, it’s best to notify the credit card company’s customer service department that you’d like the card canceled at your request — and then follow up afterward to make sure it really did get closed.
Think about this
If you still feel like you have to keep paying an annual fee to preserve your credit score, think about this:
Is your overall goal to have a good credit score, or is to handle your money well and get out of debt?
If your goal is to do smart things with your money, concentrate on doing those things instead of spending your time worrying about credit.
I'm Jackie Beck, personal finance writer and creator of 
Great article and thanks for the link!
I think the best time to close a credit card is always NOW! Once people truly understand that you really don’t need credit or a credit score to get through life, then they can really start winning with money. For most people that’s a scary thought. But I can tell you from personal experience that it is very freeing indeed!
By the way, I Tweeted, Liked, Stumbled, +1′ed, and Pinned the article for you.
Thanks, I appreciate it!
After my wife and me got out of credit card debt a few years ago, we went ahead and cancelled most the cards. Some of it was mental, we just didn’t want to look at the offending, devil cards anymore! Haha. We kept 2 though. And we still have them. No annual fees. So those are good. Our credit scores are fine. After we finally paid off our cards, our credit scores were already low (from always paying late, etc) so if our scores took more hits from cancelling the cards, well hell, we sure didn’t notice, lol. Now our scores are good.
Yay for getting rid of the devil cards! :)
My parents listed me as an authorized user on one of their credit cards when I was 9 years old, which meant that by the time I turned 25, I had more than 15 years of perfect, on-time payment history. I thought I was golden … until my parents cancelled the card, and that history disappeared. :-(
Of course, that’s a rare story. I’d have no qualms cancelling a card that’s only 1 or 2 years old.
I actually cancelled all of my credit cards back when I got divorced, and it didn’t seem to hurt anything — certainly not long-term.
I would not pay and annual fee unless the upside was huge. Even if you cancel a card, I agree that the utilization score is important to consider. Personally, unless you are in the market for a loan, or getting a new job or apartment, I wouldn’t worry too much about your credit score.
Yeah, I think you’re better off doing things that are smart with your money rather than worrying about your credit score.