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Close Credit Card Account

Mark Cappel
UpdatedDec 10, 2008

Will closing a credit card after i pay it off look bad?

Will closing a credit card after I pay it off look bad? I have a card that they lowered my credit limit on (as well as many other people) and that makes me un-happy, so I wanted to cancel it to show them that I am unsatisfied, however, my mom said that if I close a credit card it makes my credit look bad.

After paying off a credit card account, you are not required to close the account, but many consumers choose to do so. After struggling to pay an account, they want to rid themselves of the temptation to charge up the account again. In your case, it sounds like spite is a motivating force!

If you feel confident that you will not be tempted to charge up the account after paying it off (you could put the card in a bowl of water and then put it into the freezer!), then keeping the account open can offer several benefits. First, you will have available credit you can access in case of an emergency, such as an unexpected car repair. Second, paying off this account will lower your total amount of debt while increasing your total amount of available credit, thus lowering your debt to credit ratio (or debt utilization ratio), which can have a positive influence on your credit score. Finally, if the account you are paying off has a long history of timely payment, you may want to keep it open after paying off the account. Your past payment history major factor used in calculating your credit score, and closing an account with a long history of positive payments could lower your credit score.

While leaving an account open after paying it can be beneficial in the ways mentioned above, if you think you will be tempted to overuse or abuse this newly available credit, I definitely encourage you to close the account after paying it off. I wish you the best of luck with your finances, and I hope the information I have provided helps you Find. Learn. Save.




BBill, Mar, 2009
That really is your choice, but if you feel that you have too many credit cards as it is, and feel that you will not be able to afford the higher rate, it is better that you decline the changes, payoff the account and then close it.
CChuck, Mar, 2009
I have way too much credit card debt, however, I pay all of my bills on time every month. Capital One just raised my interest rate "because of recent changes in the economic climate." Is it better for me to decline the changes and pay off the card at my old rate (8.9%), or keep it open at the new rate (15.9%) and thus decrease my ability to pay it off in a timely manner?