General Question

saservp's avatar

Does cancelling a credit card hurt your credit?

Asked by saservp (291points) August 16th, 2010

I have a few credit cards that I’ve torn up and don’t use, but I didn’t cancel (I’ve never had any debt I always paid them off every month). But I have one credit card that has a yearly fee of $60. I have no need for it so I figured I might as well cancel it and save the $60. I was just curious if closing a credit card negatively affects your credit score? I know it will subtract from my “total credit” available, but is that really a big deal?


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12 Answers

Austinlad's avatar

I don’t believe cancelling will negatively impact your credit if your balance is 0 and you always paid on time. Always good to keep one credit card active for emergency expenses, though… and to use it once in a while and then pay it off. Shows you’re maintaining good credit. (Having said that, it’s hard to know what banks and credit card companies are reporting these days.)

JLeslie's avatar

Exactly. It subtracts from your total credit available. It does affect it, but you do have options if you are concerned, you can get some of your credit limits raised on your other cards.

saservp's avatar

Ah good I idea I could raise the limit on another card so my “total” would never change in the credit report. Either way I’ll probably cancel it, even if i take a small hit i don’t think its worth $60 to keep it :)

CMaz's avatar

“I could raise the limit on another card…”
Don’t do it. Bad idea.

What ever “hurt” it causes. In the end you are better off not having it in your possession.

I have come to the conclusion that the “fear” of canceling your credit card and the hurt it puts on your credit rating…

Is a hustle by the credit companies. As long as you have that card in your hand. The better chance you have of using it again.

I say, kill off what you don’t need or don’t need to have around.

lostinnyc's avatar

I don’t find it to be a huge deal, typically. However, as a tip for cards with yearly fees, sometimes if you call them and ask to cancel, they will ask why. When you bring up the annual fee often times they will give you a credit for the exact (or close to) the same amount to keep you as a card holder.
I would recommend closing it in your case, as you have no debt, but if you are concerned, try calling.

Brian1946's avatar

Go ahead and call them to cancel it.

I called one of my CC companies to cancel because the card had a high APR and a yearly fee.
They offered me a new deal with no fee and a much lower rate if I updated my account with them, so I did.

Perhaps your CC will do something similar for you.

jazmina88's avatar

In some cases, closing an account can decrease your credit rating.
It is all personal. Time you’ve had the card.

There are a couple of engines that allow you to flirt with possibilities on decisions on credit cards, and then can tell you if your score would go up or down.
Citi identity monitor has such a tool.

banks do have a retention dept. that can lower rates to save your business.

LuckyGuy's avatar

When you cancel, your credit score will go down infinitesimally. Do it anyway It is not worth the $60/year.

JLeslie's avatar

I half agree with @ChazMaz I would cancel a card if it was costing me money and I did not need it, paying a fee each year and getting nothing but the use of the card is throwing money on the street. Generally I don’t like to have a lot of cards, I find it unnecessary and a pain to keep up with several bills. However, I think it is no big deal to raise your limit if you are concerned on other cards. It seems to me you don’t have a compulsion to overspend, if youo did you would be openeing more cards, not thinking abouot closing one. I have only a few cards and I will never come close reaching any of my limits.

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shirleylopez's avatar

What I learn from credit card advice blogs and articles is that cancelling a credit card will not negatively affect your credit score as long as you have no outstanding balance. Credit bureaus and banks are more concerned on how you pay and the make it a point that you make purchases that’s why they offer multitudes of rewards and cash backs.

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