The do’s and don’ts of closing old accounts

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

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.
  •  

    Canceling credit accounts that still have a balance can come back and haunt you later. [Tweet this]

     
  • 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.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

Results 251-260 of 738Results per page: 5 | 10 | 25Page 26 of 74   Previous | Next
1 Contribution
0 People Helped

My bank recently raised the interest rate on my CC. I think this is unfair, as I have always maintained a low balance on the card, always made more then the minimum payment on the card and I recently paid the entire balance off. What gives them the right to increase my interest rate? Suffice it to say I no longer plan to use this card in future. Sadly, I cannot close this account as it is my oldest card. And I do have a relatively short credit history just 5 years.

1 Contribution
0 People Helped

Would it be wise to take out a loan to consolidate an old loan and payoff 2 line of credit cards. How would this affect my score.

1 Contribution
0 People Helped

My credit card company recently nearly doubled the interest rate on the only credit card I have. Throughout the years they have consistently raised my credit limit to where it is now, more than my annual income. I pay off my balance almost every month to avoid interest charges, but would like to get another card with a lower interest rate and keep the old one for emergencies. Before I do, I would like to lower the credit limit on the old card. How would this effect my credit score and chances of getting an additional card. My score is presently 763.

With that score, getting a new card shouldn't be a problem.

If the interest rate is the primary concern, call your existing issuer and request that they lower it. You would be surprised at how successful this can be for people with good credit. If that doesn't work, apply for another card first then you can call the existing company and request a lower credit limit keeping in mind total available credit does impact your credit score.

Review by
CK Moderator

1 Contribution
0 People Helped

I have a good credit score and strong payment history, however my bank credit card changed the cards rate to a variable from fixed and raised the interest from 7.99% to 13.4% I have never been late, over limit, etc. There is a balance on it and wonder what is my best course of action in closing this account.

Top Contributor

Reply by
ktjojo74

66 Contributions
133 People Helped
Helpful to 1 out of 1 people

Call them and ask themy some questions

1. why was it increased

2. can they fix it now

3. why not

4. when will it go back down

5. what can i do to expedite this

remind them what a good customer you are and see if there is anything you can do to lower rate.

1 Contribution
0 People Helped

I had a credit card through HSBC (Unionplus). I have very good credit and out of no where they closed my account due to "inactivity". How will this affect my FICO score. Anyone know?

Top Contributor

Reply by
ktjojo74

66 Contributions
133 People Helped
Helpful to 1 out of 1 people

It will affect  your credit for a couple of reasons.

1. depending on the age of the account, if it was one of your oldest accounts, this could hurt you quite a bit. I would ask to have it re-opened and then to keep it open just charge like one tank of gas each month and pay it off.

2, another reason it may hurt you is that it cut back your available credit.  For instance, if you had $4500 available when it was open and now you only have $3500, it will hurt your score a little.  The age of the account has more impact.

1 Contribution
0 People Helped

My one credit is closed by there company because of too much over limit.If I pay down the debt of that closed account,my credit score is up or same score?

Top Contributor

Reply by
ktjojo74

66 Contributions
133 People Helped
Helpful to 1 out of 1 people

Great question. your score will improve when you pay down the card to 50% of limit and again when it is 35% of limit and because the card is closed, you will see the largest score increase when the card is paid to 0. 

I made the mistake of closing 2 credit cards before I paid them off (the company made me mad).  I saw an instant  drop in score because i reduced my available credit.  I am just now recovering  from that mistake even though both cards have been paid off for over a year.  Sheesh. Never do anything when you are angry. 

Hope this helps.

1 Contribution
0 People Helped

I have a Bank account with $500 overdraft protection. Does this affect my credit? Online it reads like a credit line. Also, I have a debit card with the same bank, and an ATM card. do either of those count against my credit score??

Top Contributor

Reply by
ktjojo74

66 Contributions
133 People Helped
Helpful to 1 out of 1 people

Hi, great question.

First of all you had to have decent credit to get the $500 overdraft. the only time it will actually affect your credit (from experience) is if you repeatedly use it or use it and dont pay it back.  The bank will then report it and it is a bear to get it off your report. 

Part 2. Your debit card and ATM card do not report on your credit either way, 

Hope this helps.

1 Contribution
0 People Helped

My score dropped 29 points when I applied for a new credit card with Citibank in order to obtain 25000 airline miles. The only other reason for the score to drop was a cancellation of a Visa card by Chase Bank because of non-use.

1 Contribution
0 People Helped

I'm near to paying off a line of credit from Beneficial Finance. I'm considering closing it at that time but I'm not sure how it will impact my score due to UCC. I hear that Finance Company accounts lower one's score. Also, you mention too much 'available credit' will lower the score. Are there any standards for how much available credit a person should have?

1 Contribution
0 People Helped

My score dropped 80 points within a month because I closed 2 card accounts that I no longer used and was paying a monthly fee on. It was so frustrating! Now we are looking to buy a new car and having a tough time getting a decent interest rate even though my score is 675. I thought that was high enough for a relatively good interest rate, but apparently its not. All because I closed old card accounts. If only I could do it all over...

Reply by
turbosb2

6 Contributions
1 Person Helped

Thats the same thing im going through!

Results 251-260 of 738Results per page: 5 | 10 | 25Page 26 of 74   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Comment on this Article

Write your comment:
Enter Your Comments