If you pay off all your credit card accounts (not just the one you're canceling) to $0 before canceling your card, you can avoid a decrease in your credit score. Typically, leaving your credit card accounts open is the best option, even if you're not using them.
Cancelling a credit card in and of itself has no impact on your credit scores.
Southwest Rapid Rewards points don't expire; however, if you close your account, you'll also lose the points tied to that account.
Paying off the card means you aren't paying interest any more. Interest is how lenders make profits. You have become a less profitable customer, so your score dropped.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
With all of the major card issuers, if you cancel a credit card that earns flexible rewards, you lose any unredeemed points or miles. However, some programs give you a grace period to redeem points even after you close your card.
If you decide to close a Chase credit card that earns Ultimate Rewards points, you'll lose the points. The best strategy is to use your points before canceling your card or transfer them to another Chase credit card that earns Chase Ultimate Rewards points.
If your credit card issuer cancels your account for inactivity, your points disappear. Some issuers might take away your rewards immediately. For example, the Bank of America® Travel Rewards credit card terms and conditions state that your points will be forfeited if your account is closed for any reason.
A crowded wallet and the temptation to spend might have you thinking about canceling unused credit card accounts. In most cases, however, it's best to keep unused credit cards open so you benefit from longer credit history and lower credit utilization (as a result of more available credit).
Key takeaways
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
Closing a credit card account can negatively impact your credit, though how much it hurts your score depends on your credit history. Factors like how many other accounts you have open, how long you've had the accounts and the balances can all play a role.
Closing one credit card account likely won't make a big enough dent to hurt your chances of approval with future lenders, especially if you'll still have another form of revolving credit open, but it's worth being mindful of this if you want the highest credit score possible.
Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.
No, your Chase Ultimate Rewards® points do not expire — as long as you keep your credit card account open. However, if you close your card account before redeeming or transferring your rewards, you'll no longer have those points.
If your card account is closed, you'll lose the points in your Marriott Bonvoy account if you don't have any other qualifying earning or redemption activity every 24 months.
If you cancel an Amex consumer card or checking account and you do not have at least one other eligible, linked Amex card, you will lose all of the points you've earned.
While closing a credit card can affect your credit scores, it's hard to say by how much. That's because there are other factors—such as the length of your credit history and whether you have a record of making payments on time—that also play a role in your scores.
For the most part, you will not lose your points and miles when you cancel cards that fall into the first category of airline miles and hotel points, since they will typically post to your loyalty program account within a week or so of your statement closing.
While most credit card rewards programs have points that never expire, hotel and airline rewards tend to expire after 12 to 36 months. There are other ways to lose your credit card rewards outside of standard expiration, including account inactivity, becoming delinquent on your account and returning a purchase.
The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date. Proponents say it helps raise credit scores more quickly, but there's no real proof. Building credit takes time and effort.
Whenever possible, paying off your credit card in full will help you save money and protect your credit score. Paying your entire debt by the due date spares you from interest charges on your balance.
While the term "deadbeat" generally carries a negative connotation, when it comes to the credit card industry, it's a compliment. Card issuers refer to customers as deadbeats if they pay off their balance in full each month, avoiding interest charges and fees on their accounts.