Are you thinking of closing your credit card? Know what will be the impact on credit score

Updated: 25-02-2026, 02.45 AM

What is the news?

Presently people use credit cards for shopping and bill payments. Due to different benefits, they take many cards, but are not able to use many of them. Despite this, they have to pay many other fees including annual fee. In such a situation, the thought of closing these cards starts coming. If you are also thinking of doing this, then know what effect it has on your credit score.

Credit utilization ratio may increase

Credit score depends on your credit utilization ratio (CUR). A lower ratio has a positive impact on the score. If, you have 2 cards and the total limit is Rs 5 lakh. If Rs 1 lakh is spent out of this, your CUR will be 20 percent. If you close a card with a limit of Rs 2 lakh, the limit will reduce to Rs 3 lakh. If you spend Rs 1 lakh out of this, CUR will become 33 percent.

credit history

Credit history may be weak

Old accounts strengthen your credit profile. The average credit history may go down if you close your oldest card. This has the greatest impact when your overall credit history is not long. The effect of closing a new card is less. The credit bureau also looks at the balance of secured (home loan) and unsecured (credit card) loans you have. Closing the card may leave your profile a bit unbalanced.

When should the card be closed?

If the annual fee on the card is high and the benefits are less, then it is better to close the card. Excessive limit increases unnecessary expenditure, if you already have a lot of limit and the usage is very less then in such circumstances it is not wrong to close the card. Before taking a decision, clear all the dues and get written confirmation from the bank that the card has been closed on your request. Try not to close the oldest card.