At a Glance

Closing a credit card with an existing balance can significantly affect your financial well-being and credit score. Before making such a decision, it’s essential to understand the potential consequences and explore alternative options. Let’s discuss the key aspects you should consider before closing a credit card with a balance.

In this article, you’ll learn:



The average credit card balance per consumer as of Q1 2023.

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What happens when you close a credit card with a balance?

Closing a credit card with an outstanding balance isn’t as straightforward as it might seem. There are a few crucial points to be aware of.

1. You will receive credit balance mail frequently

After you’ve requested to close the credit card, you might receive frequent mail regarding the remaining balance. This correspondence may include reminders and instructions on how to settle the balance.

2. The balance will continue accruing interest

Even if you’ve closed the credit card account, any remaining balance will continue to accrue interest until it’s fully paid off. This can lead to an increase in the overall amount you owe.

Pros and cons of closing a credit card with a balance


  • Simplified finances: Closing a credit card can help simplify your financial life by reducing the number of accounts you manage.
  • Avoid temptation: If you’re concerned about overspending or managing debt, closing a card can eliminate the temptation to use it.


  • Credit utilization impact: Closing a card reduces your available credit, which can negatively affect your credit utilization ratio and potentially lower your credit score.
  • Credit history: Closing a card shortens your credit history, which may influence how lenders perceive your creditworthiness.
  • Credit score impact: Closing a card can decrease your credit score, especially if it’s one of your oldest accounts.

How can closing a credit card with a balance hurt your score?

Closing a credit card with an existing balance can harm your credit score in several ways:

  • Credit utilization ratio: Your credit utilization ratio, which measures the proportion of available credit you use, can increase if you close a card. A higher ratio can negatively impact your credit score.
  • Credit history length: The length of your credit history matters to credit scoring models. Closing an older account can shorten your credit history, potentially affecting your score.
  • Credit mix: Lenders like to see a diverse mix of credit types. Closing a credit card might reduce the variety of credit accounts in your name.

Should one close a credit card having a balance?

Deciding whether to close a credit card with a balance depends on your circumstances. Consider these factors:

  • Debt amount: If the balance is substantial, closing the card may not eliminate your responsibility to pay off the debt.
  • Credit score goals: If you’re actively working to improve your credit score, closing the card might not align with your objectives.
  • Alternative solutions: Explore alternative options, such as transferring the balance to another card or focusing on paying off the debt.

Other options besides closing your credit card with a balance

1. Switch to another card

Consider transferring the balance to a different credit card with a lower interest rate. This can help you manage the debt more effectively while keeping the credit line open.

2. Pay off your credit card balance

Prioritize paying off the balance over time to avoid accruing additional interest. This approach can help you eliminate debt while keeping the credit card account active.

Should you keep the credit card open?

1. Rewards in your account

If the credit card offers rewards, it might be beneficial to keep the account open until you’ve used or redeemed the rewards.

2. Don’t use the card

You can keep the credit card account open and simply avoid using it to prevent further debt.


Closing a credit card with no balance might have minor effects on your credit score, but they are generally less significant than closing a card with a balance.

The exact number of points your credit score may drop after closing a credit card can vary based on several factors, including your overall credit history and utilization.

Keeping a credit card account open can have benefits, such as maintaining a longer credit history and potentially improving your credit utilization ratio.

Paying off your debt before closing the card is generally advisable to avoid accruing additional interest and potentially damaging your credit score.

Yes, you’re still responsible for paying off the balance on a closed credit card. Closing the card does not absolve you of the debt.