According to many financial experts, a single credit card is sufficient for all consumers. Although it is possible to manage multiple credit cards, most consumers will only need one card. One card may be sufficient if you make many online purchases or travel frequently. If your account is compromised, it can be closed, and you will have another card to help. You might think you will cancel all your credit cards if you have more than one. It’s not a good idea to do this. Once you have a credit card account, your credit score should keep it open. However, it’s best to avoid carrying any balances month to month. For the reasons we’ll explain below, closing an account can hurt your credit.

Consider first that “keeping” your credit card account means you will keep it active and use it frequently. While other accounts might be open, they may not be used as often. While we recommend that you keep most accounts open, the one you use is the one you “keep”.

Why your credit card accounts are not being used

A credit score is affected by every credit card account that you have. Closing an account can lower your credit score. It’s best to pay it off or keep it in a secure place (such as your locked file cabinet at home). It may be necessary to use the card at least once per year to let the issuer know you are committed to their customer. Your card won’t be closed for inactivity.

Can closing a credit card account negatively impact your credit score? Five factors make up your credit score, also known as your FICO score.

  1. Your payment history accounts for 35% of your score
  2. Your credit history is 15% of your score
  3. Your score is 30% based on how much you owe.
  4. Your score is 10% if you have a new credit
  5. Credit mix is the last 10% of a score

The length of credit history will not be affected if you close your credit card account. You won’t notice any changes if the account is relatively new. However, if you have an account for a while, you could lose the long-standing boost to the “length of credit history” part of your score.

If you have any non-credit card debts, you could also cause a credit problem. After that, close all credit card accounts. To boost your “credit mix”, keep your accounts open and maintain a healthy credit balance.

Your balance owed is the biggest factor affecting your credit score if you close your credit card account. This is also known as your “utilization rate”, or credit card balance/limit ratio. Credit scoring measures how much credit you use compared to what you have. Your utilization rate is 10% if you have 10 credit card accounts with a total credit limit of $10,000 ($1,000 each) and you owe $1,000 on one card. This is a good thing for credit scores since you don’t have any capacity.

You can cancel any card that has a balance but not the rest. This will result in a $1,000 owing, which is a utilization rate of 100%. Because you have reached your maximum credit limit, this same balance is now affecting your credit score. To keep your utilization rate low, it is better to keep the accounts you don’t use open.

Experts recommend keeping credit card utilization under 30 per cent. However, lenders will also be interested in the total amount of your credit. A low credit limit doesn’t necessarily mean you are in trouble.

We recommend not purchasing more than you can afford to avoid costly finance charges. To lower your credit card utilization, you shouldn’t expect to only pay the minimum amount on a maximum-out credited credit card. The amount due when you receive your bill statement is the balance reported. You can only have a negative balance if you don’t use your card for the entire billing cycle. Or, pay the balance immediately after purchase to ensure that your billing shows a zero balance.

The last factor that could affect your score is new credit. New credit inquiries can affect 10% of your score if you apply for new cards. If you have credit accounts you need to use; you can ask the lender for a new card and continue using your existing account instead of opening one. You have no other choice than to close all unused accounts and apply for credit when you are in need. This will negatively impact your score by 10%.

You have 30-65% of your score at risk if you close unused credit card accounts. It’s simple math: don’t close any unused accounts. Your score will improve if you keep them open and pay off.

Your VantageScore, a credit scoring system created by the three major credit agencies, will also be affected. However, the percentages may differ.

  1. Payout History 40%
  2. Age of Credit 21%
  3. 20 % of credit was used
  4. Total balances 11%
  5. Credit/inquiries for new customers 5%
  6. Available Credit: 3%

No matter your lender’s score, it is better to keep accounts open than close them.

When is it okay to close my account?

You might need to close your account in certain situations.

  • Divorce. If you are divorcing and have a joint bank account, closing the account and transferring any remaining balances to your separate accounts is a good idea. Although a judge may rule one person responsible for a specific card’s debt, credit card companies won’t be bound by that ruling and will pursue collection actions against both cardholders. You should close all joint accounts to ensure your credit protection. A joint account being sent to the collection can make a situation such as a divorce even more stressful.
  • Secured Cards. To establish credit ratings, you may need to open a secured credit account if you don’t already have credit. You might need to deposit $500, $1,000, or more to use the credit card account. You can then access credit by removing the risk from the credit card company. If you can manage the credit account and have a good credit rating, the lender will likely convert the account into a regular credit account. In this case, your deposit may be refunded. You might close the account if the cardholder refuses to convert the account after you have used the card for a while and paid the monthly payments.
  • Annual Fees. If you don’t plan to use your card again and the annual fee is too high, it’s best not to renew it. You can build your credit score by having another account that you plan to use. There is no need to pay an annual fee to keep one you don’t use.
  • Debt management plans. We usually direct you to close any credit card accounts if you sign up for’s DMP. A DMP is for consumers with excessive or unmanageable debt balances. It establishes a payment plan that allows you to pay off your debts in a shorter time frame and at lower interest rates. It is necessary to close all accounts to get credit card lenders to agree to the DMP and make concessions. For small businesses or individuals who require a credit card to work, exceptions can sometimes be made.