The Do’s and Don’ts of Closing Old Accounts

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The Do’s and Don’ts of Closing Old Accounts

Closing old and unused credit accounts can help you avoid unnecessary fees and guard against identity theft. However, it can also cause your credit score to drop if you aren't careful. Here are a few do's and don'ts for closing those dormant accounts:

Do...

  • Consider closing unused cards that are costing you money. If your card has an extraordinarily high interest rate or an abundance of fees, and your provider isn't willing to lower your rate or waive some fees, you may want to consider closing the card - especially if you don't use it.
  • Be aware that you can usually cancel accounts that have an active balance by asking your creditor to close the account to new charges while you continue to pay down the balance each month. This may be a good way for heavy credit users to prevent new spending while they are reducing their balances. However, watch out for additional fees.
  • Aim to keep some accounts open. This is generally recommended to keep your credit score and debt balances healthy. Signs of active and responsible credit use are viewed positively by creditors.
  • Remember to check your credit reports for updates and errors after you close accounts. You should generally wait 30 to 60 days for the creditor and credit bureaus to update your records. While the accounts and their payment histories may stay on your report for seven or more years, the status should be updated to reflect that they are closed.


Don't...

  • Close the oldest account on your credit reports. This could cause your credit history to appear shorter, which may harm your credit score.
  • Just throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the creditor. Typically, you should receive an account closing confirmation letter in 10 days.
  • Be pressured to cancel several accounts all at once. If you want to cancel numerous credit accounts, spacing the closures over time could reduce the chance of attracting negative suspicion from potential creditors.
  • Over-consolidate balances onto one card. A good rule of thumb is to keep your credit balances under 30 percent of your available limits if possible.

If you have any more questions, head over to our Community, where you can ask other Credit Karma members about various financial topics.

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That just happened to me. This is the second car I have paid off in the past 14 mo. My score dropped. I have a 100% on time payment history with car loans & credit cards. But my score keeps dropping because I pay them off. Crazy.

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CourtFraudVictim

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The "system" is designed by Scumbags.  It is designed NOT to reward you, but to PUNISH you anytime you do anything postive, including USING CREDIT LINES and PAYING OFF ACCOUNTS.  You know why?  These scumbags ( lawyers ) make MONEY by rationalizing "YOU'RE ****ED IF YOU DO AND YOU'RE ****ED IF YOU DON'T".  A Christian methodology would be, "Payment history".  Period. 

******bags conjure up alternative ANTI-CHRISTIAN practices.  Welcome to Amerika.  Led by Nazis who will steal from you, and deny you opportunity.  Stop electing lawyer scum.  These ******bags perpeuate "judicial immunity" past 1776 . It's British tyranny.  Just so you know who's behind all of the bull****.  Lawyers.  Stop electing them.  Then abolish "immunity" and replace it with "qualified immunity".  Then all of this con artist stuff stops.

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This metric is a crock of horsehsit!

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My wallet was stolen so all my accounts were "closed" and new cards issued.  My credit score tanked!  Can this be fixed?

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My home loan is being transfered for the third time. Not because I requested it or had any control over the lenders selling my loan. This should not count against my credit score since I have paid my payment on time and did not chose to refinance the loan.

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I totally agree! so disccouraging! i paid my car off early, and thus, have "no credit history" (ridiculous, inaccurate.) it's not fair! My credit score has actually never been this low, despite having paid off all my student loans and car, and making impeccably on-time payments every time. so annoying. ::; eye roll:::

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CourtFraudVictim

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Paying off debt is NOT want the scumbags want you to do.  So they punish you.  They want you to only use 30% of your credit lines.  If you use 40% they punish you.  This system was designed by a madman.  It's sadistic and nuts.

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A few weeks ago my bank notified me of unusual credit card usage, as my credit card number was used in San Diego, CA in the amount of $200, which they took off my statement. 

Then last week someone used my credit card number in New York, NY to purchase Grubhub food over a five-day period in the amount of $730.89.  I notified the bank.  I also notified Grubhub as to the illegal use at the various restaurants, the dates of use and the amounts of each purchase.  They SHOULD be able to backtrack to where they delivered the food and find the person who used the card number and make an arrest (in a perfect world). 

I told my bank that the card should have been cancelled when the theft was made with the illegal San Diego purchase.  Doing that would have prevented the theft in New York. I received notice via e-mail that the bank cancelled my credit card.  That was six days ago and I still have not received a new credit card from them.  Due to the cancellation of my credit card my score went from 840 to 822.

So much for being a reliable person with money!

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yes this absolutely rediculious, paid off a 3yr. motorcycle loan in less than a year 10,000 and then pay off my best buy card 6000.00 (didn't close it) and my score went from 775 to 751. that just plain STUPID AS HELL. IM SOOOOOO ****ED ABOUT IT. Makes no **** sense at all. 

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Totally agreed!

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who cares about the great FICO use Dave Ramseys principles and get out of debt pay cash your not the government that can make more money

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Same thing happened to me! I paid mine off 3 years early and my score dropped 40 points!

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