The content is accurate at the time of publication and is subject to change.

News: Closing A Credit Card With A Balance: Important Things To Know -

You don't need to pay off your credit card to close it. However, there are plenty of things to know before you close a credit card with a balance. The most important one, you'll still need to pay off any remaining balance. You should have a strong reason to close your card before you pay off your debt versus just keeping it open until the balance is paid off.

So, you decided to close your credit card with a balance. Now you need to know what happens next. When you close a card, your debt won't disappear and you will remain legally responsible for paying it off. Furthermore, your credit card agreement will remain active, meaning the bank will continue to charge you interest as normal. Plus, you will continue receiving credit card statements every month as long as you owe a balance, and you will have to make all minimum payments due.

If your closed card has an annual fee, the issuer cannot increase or charge you new fees after you close your card. So, this is a good way to avoid paying expensive annual fees for a credit card.

Another thing to keep in mind when closing a credit card with a balance is that it can impact your credit score. When you close any credit card account, it can negatively impact your credit utilization ratio, which makes 30 percent of your FICO score. If you have a lot of debt, the impact will be more noticeable compared to when you have little to no debt.

Closing your credit card can also affect your overall length of your credit history, which makes 15 percent of your FICO score. If you do not have other revolving accounts with lengthy history, you may see your credit score drop a few points.

To sum up, here are the pros and cons of closing a credit card with a balance:


  • Avoid paying annual fee
  • No temptation to use the card
  • Fewer accounts to manage


  • You can hurt your credit score
  • You'll lose cardholder benefits
  • You'll still have to pay off your debt.

There are situations when you can avoid closing a credit card or when you don't really need to close it. It's almost always better off leaving your credit card open. This is especially true when you are trying to improve your credit. There are always alternatives to closing a credit card. For example, if you no longer want to pay the card's annual fee, you can contact the issuer to see if there is an option to downgrade your card to a free version.

If you have debt you want to pay down, you can transfer your balance to a balance transfer credit card that offers 0% intro APR.