Is cancelling a credit card bad for your credit?

I have a card that I want to cancel. I haven't used in in almost 2 years, and there is an annual user fee of $20. I just got the bill yesterday, and now I'm thinking of cancelling the card because I don't want to pay the $20 member fee! I heard that if you cancel a credit card account it's bad for your credit. Is this true? Is it worth me doing this or should I just pay the $20?

5 Answers

  • 1 decade ago
    Favorite Answer

    There are two situations where closing a credit card account could have a negative impact on your credit score.

    1. You have limited credit history and the card you are closing is the oldest account you have. Part of your credit score is based on the history of your credit. So, closing your oldest account would negatively impact your score.

    2. You carry a high (30% or more) revolving utilization on the accounts you leave open. If you have $10,000 in credit limits and are carrying balances of $2000, then your revolving utilization would be 20%. However, if this card you're considering closing has a $5000 limit and you close it, then you'd be left with a $2000 balance on $5000 in limits (40% rev util). This would have a negative impact on your score.

    Also, you could always call and ask that the annual fee be waived and/or if you can switch to an account without an annual fee. If nothing else, you can cancel the card once the fee has been waived. That way you're not out the $20. Hope this helps!

    Source(s): 6 years in consumer finance
  • 5 years ago

    Yes, It may be . Too many borrowers dismiss secured credit cards because the cards require a security deposit to be made against the credit limit. A secured credit card that reports to the major bureaus is better than having no credit card at all. Many secured credit cards can be converted to unsecured credit cards after a year of on-time payments. Some of the money can be used to take care of the application fee and the rest can be put toward your credit card balance.

  • Anonymous
    1 decade ago

    Not if you have paid it off.

    And why do you have a credit card that charges you an annual fee? You can get a card that doesn't. You can get a card that only charges you monthly based on your current balance. Try to keep your balance low or zero before the monthly billing date comes, if possible.

  • Anonymous
    1 decade ago

    Canceling a credit card DOES HURT YOUR CREDIT !

    What happens when your credit card is canceled, your decreasing your balance-to-limit and credit-mix ratios.

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  • 1 decade ago


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