Ask Credit Karma: How Do I Ditch My Old Credit Card?


The Question:

I have a credit card that I opened when I started college about seven years ago, but have since stopped using it in favor of another card with the same issuer that provides better rewards. I’d like to close my first card and open this new card. I don’t think opening a new card will “make up” for the hit from closing the card, but closing a card doesn’t stay on your credit report forever, right?


Woman Holding A Credit Card

The Answer:

I had a friend back in college who switched boyfriends every other month to “upgrade,” as she called it. However, switching credit cards will leave you with more than just heartache; a closed account can lower your credit score and remain on your credit report for up to seven years.

While closing a credit card isn’t inherently bad, know your full credit situation so you are aware of how your credit may be impacted. Let’s look at the facts:

Closing Your Credit Card.

A closed account immediately impacts your credit score by reducing available credit and shortening your credit history. Keep in mind, your credit history is a significant factor of your credit score, especially if it’s your oldest credit card. Closing a card that may constitute a bulk of your credit history could seriously impact your score. This fact alone may be reason enough to keep your card open.

Applying For A New Card.

It’s minimal compared to the damage done when closing a long-standing credit card, but applying for a new card results in a hard inquiry that knocks a few points off your score.

Getting A New Card.

On the bright side, getting a new credit card will also add available credit and lower your credit utilization rate, which can help bring up your credit score again.

Is there a pressing reason to close your old credit card, like an annual fee? If not, consider just keeping your card open and active by charging one or two small purchases a month and paying in full. That way, you can have your cake and eat it too, with that new rewards card in hand and your credit history intact.

As long as you’re maintaining good credit and aren’t hoarding debt, aim to upgrade your credit card no more than once a year; one of the benefits of good credit is access to better financial perks. Just make sure you don’t go down the same road as my college buddy, chasing rewards card after rewards card in short order. There will always be another richer, more appealing rewards card that issuers will cook up. Learn to use your plastic wisely, and you’ll reap the benefits of rewards and healthy credit.