Advertising Disclosure *Advertising Disclosure: is an independent, advertising-supported comparison service. receives compensation from the credit card issuers whose credit card offers appear on the website. The compensation may impact the order in which they appear within listing categories. does not include the entire universe of available credit or financial offers.

About Editor's Picks: Our editor selects credit cards based on the features the credit card offers consumers, including introductory rates, fees, long term interest rates, and its relative value compared to competing offers. While this site receives remuneration from credit card companies, our rankings strive to objectively provide consumers with relevant, unique options.

Think Twice Before Closing Old Credit Cards

Smart Balance Transfers provides in-depth information and insights into credit cards. While we do accept Smart Balance Transfers provides in-depth information and insights into credit cards. While we do accept compensation from credit card companies when consumers visit their websites, we have striven to provide unbiased reviews since 2007.

Credit cards are remarkably easy to apply for and receive. All it takes is a about a minute online, and with instant approval, a card will arrive in the mail within days. Additionally, so many credit cards now come with valuable sign up bonuses that it is easy for cardholders to accumulate quite a portfolio of plastic. At some point, most cardholders will become overwhelmed by all their open accounts and may wish to close some. This can be a good idea, but in many cases, it is better just to keep the cards open.

Closing revolving charge accounts can have a negative impact on consumer’s credit score for two reasons. First, closing an account reduces cardholder’s available credit. Therefore, for a given level of debt, the cardholder’s debt to credit ration will go up. Close multiple accounts and that figure can soar. In addition, closing accounts reduces cardholder’s credit history, especially if the cards cancelled have been held for many years. Since the average length of credit history is another factor in credit scores, reducing it will hurt one’s credit.

Next, cardholders should examine their reasons for cancelling the card. If the cardholder has substantial debt, obviously it will still have to be paid off whether or not the card remains active. By closing the account with pending debt, the cardholder will risk having a negative debt to credit ration. In this case, simply cutting the card up may solve the problem of over spending, but calling to cancel the account will hurt the cardholder’s credit score.

Another problem with closing a credit card account is that the cardholder may forfeit any rewards. For example, the Costco card from American Express only disperses cash back in February. Cancel the card before receiving the cash back voucher and it will not be received. Other,bank operated loyalty point programs have terms that negate access to accumulated points once the cardholder has closed the account.

Finally, consider the positive consequences of keeping an account open, but inactive. Cardholders will extend the length of their credit history and retain access to valuable benefits and perks. If the credit card has no annual fee, there is really nothing lost by continuing to leave the account open.

By carefully considering all of the consequences of closing a credit card account, consumers can make the best decisions for their individual circumstances.

Editor's Note: This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Citi or any of the other companies whose products are featured in this content.

About the author

Jeff Weber

Jeffrey Weber has been following and blogging about the credit card industry since 2004. He has also written for Forbes and been cited in a wide range of major media outlets including USA Today, Time, MSN Money, The Christian Science Monitor, The Detroit Free Press and numerous other prestigious online and print publications.

Jeffrey resides in Easton, Connecticut and enjoys spending his free time chasing after his two year old son, watching films with his wife and occasionally taking a holiday to go snorkeling.

– has written 279 posts.

Leave a Comment

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Previous post:

Next post: