Does Closing A Charge Card Hurt Credit?

By Bruce Boswell •  Updated: 12/14/21 •  6 min read
Filed under: Credit Cards

Are you considering closing a charge card and want to know if it will hurt your credit or not? Perhaps you have spent the last few months trying to boost your credit score and don’t want your hard work to be undone?

Or maybe you are curious and want to know more? Whatever your reason might be, we have the answer for you!

Does Closing A Charge Card Hurt Credit

Charge cards were once wildly popular, offering plenty of rewards and benefits to its customers. But as credit cards now offer much of the same benefits, they have fallen by the wayside a little and many owners are left wondering, can I close the account?

The last thing you want is to damage your credit score and restrict your access to better loans, but you don’t want to be stuck paying hefty fees for a card you don’t use. 

Before you know it, you are overwhelmed, stressed, and unsure what to do, spending your time frantically searching, but never finding the answers that you want. 

Well no more! Today we have all the answers you want. Keep reading to find out if a charge card can hurt your credit or not and anything else you need to know. 

What Is A Charge Card?

Before we dive in, let’s have a quick recap for anyone who needs it! A charge card is a card that can be used anywhere it is accepted as payment. The card comes with no interest charges but must be paid in full when your statement arrives.

The card will come with unlimited spending, offering flexibility, but the need for a full payment usually helps to regulate spending on these cards. 

If you miss a payment, the charge card company will report it to the credit bureaus, and it will negatively impact your credit score. You will notice that your score is reduced and might find it harder to secure further credit cards or loans. 

Charge cards also come with rewards and benefits which have helped make them so popular. Every time you make a purchase you can earn points, with offers for double or triple points when they spend on travel and dining. You can then spend the points on luxury brands, everyday items, or receive travel deals! 

While they can be a good card to use, they come with an annual fee that could be up to $500. If you aren’t using the card often, or aren’t earning the level of points you would like, it can seem counterproductive to have the card and pay the annual fee. 

In recent years we have seen a decline in charge cards, especially as many credit cards now come with their rewards and benefits. You can usually find a reward credit card with a good interest-free period that you could use as you would a charge card.

Be sure to make use of comparison sites to find the best deal for you.  

Now that we have covered what a charge card is, let’s move on and see if closing one can hurt your credit score. 

Does Closing A Charge Card Hurt Credit?

Unlike credit cards, a charge card won’t hurt your credit when you close it! You can save yourself the costly annual fees and close any charge cards that you no longer use or need. When closing a charge card, be sure that you have paid the full amount off to avoid any fees or hurting your credit score. 

You can close your charge card by contacting your provider and requesting to close the account. You can do this usually online or over the phone depending on how your provider operates.

It’s worth noting that you will lose access to any points or rewards you have accumulated, so it’s best to cash these in first to avoid missing out! 

While closing your charge card won’t impact your credit score, it can impact your length of credit history, which some lenders can use to determine if they will grant you a credit card or loan. 

If you have had your charge card for nine years and have three other credit cards open for 5,4, and 2 years you will have an average length of credit history of five years. If you then close the charge card, your length of credit will drip to roughly 3.7 years.

This could be an issue with lenders looking for a trail of five years. Often a credit history of three years is required by lenders to see that you have been given credit before and can make the repayments on time. 

If closing your charge card takes your credit history length below three years then you might find it difficult to get a mortgage or other loans. However, if you have other credit cards that you are using, you shouldn’t notice too many issues.

Also, if your charge card isn’t your longest-held card, then it is likely to have little to no impact on your score. You can close the account without needing to worry about its impact. 

It is worth noting that some credit scoring models will look at how long closed accounts have been closed as they can still appear on your reports. Others will exclude the age of a closed account and it is unlikely to show on any credit score reports.

This does vary entirely from report to report, so be sure to look at how credit scoring models use closed accounts before closing your charge card. 

Final Thoughts 

And just like that, we have come to the end of our charge card journey today! As you can see, closing a charge card does not impact your credit score! So if you have an old card you aren’t using, you can close it and save yourself the money spent on annual fees!

Just be mindful that if it is your longest-held card, your length of credit history might be impacted. If you have any questions be sure to reach out to a finance expert who can provide you with more tailored advice. 

Worried about your credit? Read here if declined credit card affects credit score.

Bruce BoswellBruce Boswell

Bruce Boswell

Bruce Boswell enjoys researching and writing about all things related to investing and saving money. Whenever he has a chance, Bruce loves travelling all around the world with his wife and trying new foods.