NEW YORK (MainStreet) — We’ve always cautioned readers to think twice before closing a credit card since doing so could hurt your credit score.

Account closures can have an effect on your credit-to-debt utilization ratio, especially when the card in question has a particularly high credit limit. Additionally, they can cost you the bonus points awarded by certain models when you have what’s considered an ideal number of cards in your wallet.

It can also have an impact on the age of the credit file, but not in the ways most people think. Closed accounts actually continue to appear on a person’s credit report for 10 years after a customer has formally gotten rid of the card, so those who replace the card with another product aren’t likely to see much damage down the road; their new cards will have supplemented their credit history.

Regardless of these potential consequences, there are certain instances where closing an account is certainly warranted. We take a look at these situations and outlines how you can minimize the damage done to your credit score.

Your annual fee is too high.

Rewards cards are known for carrying high annual fees, which cardholders are required to pay whether they’re actively using them or not. Those who aren’t spending enough to reap the rewards and justify the annual fee may feel it’s time to close the card and take their business elsewhere. (There are certainly decent rewards cards out there that don’t have an annual fee attached.)

If you do decide the card has become too costly, you should check with your issuer to see if they have a no-fee version of the card you can downgrade to. This will help keep your credit utilization ratio intact as well as maintain any points you were getting from having an ideal number of credit cards.  

Your card has been compromised.

Credit card fraud has become more and more prevalent these days, and sadly it’s in the cardholder’s best interest to close an account before the hacker can wreak havoc with it.

Fortunately, what financial institutions typically do in the instance of fraud (or the threat of fraud) is close the account and immediately replace it with a card adhering to the same terms and conditions as the original. This means the cardholder’s credit utilization ratio remains the same and the credit score remains intact.
Your issuer won’t lower your APR.

Contrary to popular belief, a credit card’s accompanying annual percentage rate isn’t set in stone. Savvy customers can often get their issuer to lower their current rates by using an improved score or credit card solicitations they’ve received in the mail as a bargaining chip. If your issuer is being a stickler, you may want to close the card and open a similar one with another issuer offering a lower interest rate.

What other seemingly innocuous moves can have an impact on your credit standing? Find out in MainStreet’s roundup of  seven small mistakes that can hurt your credit score!

—Jeanine Skowronski is staff reporter for MainStreet. You can reach her by email at, or follow her on Twitter at @JeanineSko.